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UNIVERSITY  OF  CALIFORNIA 
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P                  REPORT 

of 

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^     INDUSTRIAL 

1     COSFERESCE 

^^^HnT!7 

r                                          called  by 

"                 THE  PRESIDENT 

■ 

p 

r                                    William   B.   Wilson,   Chairman 
H'erbert  Hooves,  Vice  Chairman 

Martin  H.  Glynn                        Oscar  S.  Straus 
Thomas  W.  Gregory                    Henry  C.  Stuart 
Richard  Hooker                          William  O.  Thompson 
Stanley  King                              Frank  W.  Taussig 
Samuel  W.  McCall                    Henry  J.  Waters 
Henry  M.  Robinson                     George  W.  Wickersham 
Julius  Rosenwald                      Owen  D.  Young 
George  T.  Slade 

WiLLARD   E.    HOTCHKISS, 

Henry  R.   Seager, 

Executive  Secretaries 

March  6,  1920 

hHS' 


REPOR 1 

of 

I  S  DUS  IRIAL 

COSFERESCE 

called  by 

THE    PRESIDENT 

March     6,      1920 

\^  \  ? 

TABLE  OF  CONTENTS. 

PAGE 

I — Introduction  5 

,vf>          II — Prevention  of  Disputes 9 

'*        *                 Joint  Organization  Through  Employee  Representation 9 

III — Plan  for  Adjustment  of  Disputes 13 

General  Description    13 

1.  Procedure  When  Both  Sides  Voluntarily  Submit  Disputes 

for  Adj  ustment 13 

2.  Procedure  When  There  is  no  Voluntary  Submission 14 

Details  of  the  Plan 15 

1.     National   and   Regional    Boards 15 

2.  National  Industrial  Board 15 

3.  Regional   Chairmen   and  Vice-Chairmen 16 

4.  Panels  of  Employers  and  Employees  for  Regional  Boards.  16 

5.  Detailed  Procedure  of  Regional  Adjustment  Conference..  17 

Cognizance  of  Disputes 17 

Submission 17 

Selection  of  Representatives 18 

Selection  from  the  Panels 18 

Formation  of  Regional  Adjustment  Conference 18 

Ascertainment  of  Facts 18 

6.  Powers  and  Duties  of  Regional  Board  of  Inquiry 19 

Organization  of  Regional  Board  of  Inquiry 19 

Right  to  Subpoena  and  Examination 19 

Reports    19 

Right  of  the  Chairman  to  Vote 19 

7.  Transformation  of   the   Regional   Boards   of   Inquiry   Into 

Regional  Adjustment  Conferences 19 

8.  Umpire    20 

J                                   9.     Combination    of    Regions 20 

10.     Time  of  Reporting  Findings 20 

>                                11.    Effect  of  Decision 21 

J                                 12.     Application   of   Awards 21 

A                                   13.     Procedure  on  Failure  to  Comply  with  an  Award 21 

■^  14.     Relation   of   Boards  to   Existing  Machinery   for  Concilia- 

|p                                                  tion  and  Adjustment 22 

w                                    15.     General  Provisions    22 

16.  Basis  of  Decisions 23 

17.  Protection  of  Information 24 

Public  Utilities    24 

Public  Employees   27 

IV — Other  Problems  Affecting  the  Employment  Relationship 29 

1.  The  Development  of   Industrial  Relations 29 

2.  Collective  Bargaining  30 

3.  Hours    of    Labor 32 

4.  Women  in  Industry 34 

5.  Child  Labor  34 

6.  Housing    36 

7.  Wages    37 

8.  Profit  Sharing  and  Gain  Sharing 38 

9.  Thrift  Agencies    39 

10.  Inflation  and  High  Cost  of  Living 40 

11.  Public   Employees    41 

12.  Agriculture    44 

13.  Unemployment  and  Part  Time  Employment 45 

14.  Public  Employment  Clearing  House 51 

V — Conclusion 51 

188602 


REPORT  OF  INDUSTRIAL  CONFERENCE. 
I.    INTRODUCTION. 

The  Industrial  Conference  was  convened  by  the  President  on  De- 
cember 1,  1919.  Under  date  of  December  19th  it  issued  for  publication 
on  December  29th,  a  tentative  plan  of  machinery  to  adjust  disputes  in 
general  industry  by  conference,  conciliation,  inquiry  and  arbitration. 
Criticism  and  constructive  suggestions  from  the  public  were  requested. 

The  tentative  report  provided  for  the  adjustment  of  disputes  rather 
than  their  prevention.  The  purpose  of  the  Conference  in  publishing 
that  report  was  to  obtain  at  the  earliest  moment  constructive  criticism 
of  the  plan  for  adjustment,  while  the  Conference  was  engaged  in  the 
further  development  of  methods  of  prevention. 

The  Conference  reconvened  on  January  12,  1920.  It  has  received 
a  vast  amount  of  helpful  comment  from  individuals  and  organizations 
in  all  parts  of  the  country  and  it  has  also  had  the  assistance  of  leading 
representatives  of  capital  and  labor,  speaking  for  large  numbers  of 
employers  and  employees,  who  have  come  before  it  in  frank  con- 
sultation.    This  material  has  been  carefully  weighed. 

The  Conference  now  proposes  joint  organization  of  management 
and  employees  as  a  means  of  preventing  misunderstanding  and  of  secur- 
ing cooperative  efifort.  It  has  modified  the  tentative  plan  of  adjust- 
ment so  as  to  diminish  the  field  of  arbitration  and  enlarge  the  scope 
of  voluntary  settlement  by  agreement.  As  modified  the  plan  makes 
machinery  available  for  collective  bargaining,  with  only  incidental  and 
limited  arbitration.  The  Conference  has  extended  the  plan  to  cover 
disputes  affecting  public  utilities  other  than  steam  railroads  and  it  has 
enlarged  it  to  cover  the  services  of  public  employees. 

The  present  report  also  deals  with  a  number  of  specific  subjects 
consideration  of  which  should  underlie  any  approach  to  the  industrial 
problem.     Some  of  these  are  matters  of  current  controversy. 

The  causes  of  industrial  unrest  are  many.  Among  others  they 
include  the  rise  in  the  cost  of  living,  unrestrained  speculation,  spectac- 
ular instances  of  excessive  profits,  excessive  accumulation  and  misuse 
of  wealth,  inequality  in  readjustments  of  wage  schedules,  release  of 
ideas  and  emotions  by  the  war,  social  revolutionary  theories  im- 
ported from  Europe,  the  belief  that  free  speech  is  restricted,  the 
iiiLcrmittency  of  employment,  fear  of  unemployment,  excessive  hours 
of  work  in  certain  industries,  lack  of  adequate  housing,  unnecessarily 
high  infant  mortality  in  industrial  centers,  loss  of  personal  contact  in 


6  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

large  industrial  units  and  the  culmination  of  a  growing  belief  on  the 
part  of  both  employers  and  employees  that  a  readjustment  is  necessary 
to  a  wholesome  continuity  of  their  united  effort. 

For  the  most  part  causes  of  unrest  are  not  the  result  of  the  war ; 
'they  have  been  accentuated  by  it.  Much  investigation  and  public  dis- 
cussion have  been  devoted  to  these  matters.  The  relative  importance 
and  emphasis  laid  on  the  different  causes  varies  with  each  investigator. 
The  Conference,  in  Part  IV,  has  made  suggestions  for  dealing  with 
some  of  the  conditions  enumerated,  and  it  hopes  that  progress  toward 
remedying  them  may  be  accelerated  by  the  further  development  of 
employee  representation  and  by  the  use  of  the  suggested  machinery  for 
adjustment. 

There  is,  however,  a  feature  of  the  present  industrial  unrest 
which  differentiates  it  from  that  commonly  existing  before  the  war. 
It  cannot  be  denied  that  unrest  today  is  characterized  more  than 
ever  before  by  purposes  and  desires  which  go  beyond  the  mere  demand 
for  higher  wages  and  shorter  hours.  Aspirations  inherent  in  this  form 
of  restlessness  are  to  a  greater  extent  psychological  and  intangible. 
They  are  not  for  that  reason  any  less  significant.  They  reveal  a 
desire  on  the  part  of  workers  to  exert  a  larger  and  more  organic 
influence  upon  the  processes  of  industrial  life.  This  impulse  is  not 
to  be  discouraged  but  made  helpful  and  cooperative.  With  compre- 
hending and  sympathetic  appreciation,  it  can  be  converted  into  a 
force  working  for  a  better  spirit  and  understanding  between  capital 
and  labor,  and  for  more  effective  cooperation. 

The  wisest  suggestions  for  the  prevention  and  relief  of  industrial 
unrest  are  to  be  found  by  interpreting  the  best  thought  and  experience 
of  those  employers  and  employees  who,  within  the  area  of  their  own 
activities,  have  most  successfully  dealt  with  the  problem.  The  Con- 
ference in  making  its  final  report  has  considered  the  interpreting  of 
actual  achievements  its  most  useful  function.  It  believes  that  practical 
experience  is  more  useful  than  the  views  of  extremists  on  cither  side. 
Such  exi)criencc  shows  that  no  group  of  men  can  successfully  undertake 
to  deal  with  the  interests  of  other  groups  without  their  cooperative 
participation  in  the  methods  of  equitable  adjustment. 

The  guiding  thought  of  the  Conference  has  been  that  the  right 
relationship  between  employer  and  employee  can  be  best  promoted  by 
the  deliberate  organization  of  that  relationship.  That  organization 
shoulfl  begin  within  the  plant  itself.  Its  object  should  be  to  organize 
unity  of  interest  and  thus  to  diminish  the  area  of  conflict,  and  supply 
by  organized  cooperation  between  employers  and  cm|)loyees  the  ad- 
vantages of  that  human  relationship  that  existed  between  them  when 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  7 

industries  were  smaller.  Such  organization  should  provide  for  the 
joint  action  of  managers  and  employees  in  dealing  with  their  common 
interests.  It  should  emphasize  the  responsibility  of  managers  to  know 
men  at  least  as  intimately  as  they  know  materials,  and  the  right  and 
duty  of  employees  to  have  a  knowledge  of  the  industry,  its  processes 
and  policies.  Employees  need  to  understand  their  relation  to  the  joint 
endeavor  so  that  they  may  once  more  have  a  creative  interest  in  their 
work. 

Industrial  problems  vary  not  only  with  each  industry  but  in  each 
establishment.  Therefore,  the  strategic  place  to  begin  battle  with  mis- 
understanding is  within  the  industrial  plant  itself.  Primarily  the  set- 
tlement must  come  from  the  bottom,  not  from  the  top. 

The  Conference  finds  that  joint  organization  of  management  and 
employees  where  undertaken  with  sincerity  and  good  will  has  a  record 
of  success.  The  general  principles  governing  such  organization  are 
stated  at  length  under  the  title,  "Employee  Representation."  It  is  not 
a  field  for  legislation,  because  the  form  which  employee  representa- 
tion should  take  may  vary  in  every  plant.  The  Conference,  therefore, 
does  not  direct  this  recommendation  to  legislators  but  to  managers 
and  employees. 

If  the  joint  organization  of  management  and  employees  in  the  plant 
or  industry  fails  to  reach  a  collective  agreement,  or  if  without  such  joint 
organization,  disputes  arise  which  are  not  settled  by  existing  agencies, 
then  the  Conference  proposes  a  system  of  settlement  close  at  hand  and 
under  governmental  encouragement,  and  a  minimum  of  regulation. 
The  entrance  of  the  Government  into  these  problems  should  be  to 
stimulate  further  cooperation. 

The  system  of  settlement  consists  of  a  plan,  nation  wide  in  scope, 
with  a  National  Industrial  Board,  local  Regional  Conferences  and 
Boards  of  Inquiry,  as  follows : 

1.  The  parties  to  the  dispute  may  voluntarily  submit  their  differ- 
ences for  settlement  to  a  board,  known  as  a  Regional  Adjustment 
Conference.  This  board  consists  of  four  representatives  selected  by 
the  parties,  and  four  others  in  their  industry  chosen  by  them  and 
familiar  with  their  problems.  The  board  is  presided  over-  by  a  trained 
government  ofificial,  the  regional  chairman,  who  acts  as  a  conciliator. 
If  a  unanimous  agreement  is  reached,  it  results  in  a  collective  bargain 
having  the  same  effect  as  if  reached  by  joint  organization  in  the  shop. 

2.  If  the  Regional  Conference  fails  to  agree  unanimously,  the 
matter,  with  certain  restrictions,  goes,  under  the  agreement  of  submis- 
sion, to  the  National  Industrial  Board,  unless  the  parties  prefer  the 
decision  of  an  umpire  selected  by  them. 


8  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

3.  The  voluntary  submission  to  a  Regional  iVdjustment  Confer- 
ence carries  with  it  an  agreement  by  both  parties  that  there  shall  be 
no  interference  with  production  pending  the  processes  of  adjustment. 

4.  If  the  parties,  or  either  of  them,  refuse  voluntarily  to  submit 
the  dispute  to  the  processes  of  the  plan  of  adjustment,  a  Regional 
Board  of  Inquiry  is  formed  by  the  regional  chairman,  of  two  em- 
ployers and  two  employees  from  the  industry,  and  not  parties  to  the 
dispute.  This  Board  has  the  right,  under  proper  safeguards,  to  sub- 
poena witnesses  and  records,  and  the  duty  to  publish  its  findings  as  a 
guide  to  public  opinion.'  Either  of  the  parties  at  conflict  may  join  the 
Board  of  Inquiry  on  giving  an  undertaking  that,  so  far  as  its  side  is 
concerned,  it  will  agree  to  submit  its  contention  to  a  Regional  Adjust- 
ment Conference,  and,  if  both  join,  a  Regional  Adjustment  Conference 
is  automatically  created. 

5.  The  National  Industrial  Board  in  Washington  has  general  over- 
sight of  the  working  of  the  plan. 

6.  The  plan  is  applicable  also  to  public  utilities,  but  in  such  cases, 
the  government  agency,  having  power  to  regulate  the  service,  has 
two  representatives  in  the  Adjustment  Conference.  Provision  is  made 
for  prompt  report  of  its  findings  to  the  rate  regulating  body. 

The  Conference  makes  no  recommendation  of  a  plan  to  cover 
steam  railroads  and  other  carriers,  for  which  legislation  has  recently 
been  enacted  by  Congress. 

7.  The  plan  provides  machinery  for  prompt  and  fair  adjustment  of 
wages  and  working  conditions  of  government  employees.  It  is 
especially  necessary  for  this  class  of  employees,  who  should  not  be 
permitted  to  strike. 

8.  The  plan  involves  no  penalties  other  than  those  imposed  by 
public  opinion.  It  does  not  impose  compulsory  arbitration.  It  does 
not  deny  the  right  to  strike.  It  does  not  submit  to  arbitration  the 
policy  of  the  "closed"  or  "open"  shop. 

The  plan  is  national  in  scope  and  operation,  yet  it  is  decentralized. 
It  is  different  from  anything  in  operation  elsewhere.  It  is  based  upon 
American  experience  and  is  designed  to  meet  American  conditions.  It 
employs  no  legal  authority  cxce])t  the  right  of  iiujuiry.  Its  basic  idea 
is  stimulation  to  settlement  of  difTi'rences  l)y  the  jxartics  in  conflict, 
and  the  enlistment  of  public  opinion  toward  enforcing  that  method 
of  settlement. 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 


II.    PREVENTION  OF  DISPUTES. 

JOINT  ORGANIZATION  THROUGH  EMPLOYEE 
REPRESENTATION. 

Prevention  of  disputes  is  worth  more  than  cure.  The  Conference 
feels  that  a  new  basis  of  industrial  peace  may  be  found  in  the  further 
development  of  the  democratic  organization  of  the  relations  of  em- 
ployers and  employees,  now  widely  in  progress  through  the  country. 

Modern  industry,  as  conducted  in  large  plants,  has  caused  a  loss 
of  personal  contact  between  employers  and  employees.  It  has  also 
caused,  through  high  specialization  and  repetitive  mechanical  processes, 
a  loss  of  creative  interest.  But  it  makes  possible  a  greater  production 
of  the  material  things  which  contribute  to  the  common  resources  of 
the  people.  Upon  these  resources  an  advancing  civilization,  with  a 
higher  common  standard  of  living,  must  depend. 

Direct  personal  contact  in  the  old  manner  cannot  be  restored.  It  is 
necessary,  therefore,  to  find  the  best  possible  substitute  through  demo- 
cratic representation.  Employees  need  an  established  channel  of  expres- 
sion and  an  opportunity  for  responsible  consultation  on  matters  which 
afifect  them  in  their  relations  with  their  employers  and  their  work. 
There  must  be  diffused  among  them  a  better  knowledge  of  the  indus- 
try as  a  whole  and  of  their  own  relation  to  its  success.  Employee  rep- 
resentation will  not  only  enable  them  better  to  advance  their  own  inter- 
ests, but  will  make  them  more  definitely  conscious  of  their  own  con- 
tribution, and  their  own  responsibilities. 

Employee  representation  has  been  discussed  under  different  names 
and  forms,  such  as  shop  committees,  shop  councils,  works  councils, 
representative  government  in  industry  and  others.  But  representation 
is  a  definite  principle  rather  than  a  form.  The  Conference,  therefore, 
prefers  the  generic  term  "employee  representation."  In  using  this 
term  the  Conference  has  in  mind  the  successful  application  of  the 
principle  to  various  activities  outside,  as  well  as  within,  the  purely 
industrial  field. 

From  both  employers  and  employees  the  Conference  has  received 
thoughtful  and  helpful  suggestions  as  to  the  possibilities,  under  proper 
conditions,  of  employee  representation.  These  suggestions  clearly 
proceed  from  a  genuine  desire  that  this  movement  may  spread  in  ac- 
cordance with  sound  principles  and  be  kept  from  perversions  which 
would  threaten  its  lasting  usefulness  by  making  it  an  agency  of  attack 
rather  than  a  means  to  peace. 

Employee  representation  organizes  the  relations  of  employer  and 


10  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

employee  so  that  they  regularly  come  together  to  deal  with  their  com- 
mon interests.  It  is  operating  successfully  under  union  agreements  in 
organized  shops.  It  is  operating  in  non-union  shops,  and  it  is  operat- 
ing in  shops  where  union  and  non-union  men  work  side  by  side.  In 
plants  working  under  union  agreement,  it  adds  to  collective  bargain- 
ing an  agency  of  cooperation  within  the  plant.  It  is  itself  an  agency 
of  collective  bargaining  and  cooperation  where  union  agreements  do 
not  obtain. 

It  is  idle  wholly  to  deny  the  existence  of  conflicting  interests  between 
employers  and  employees.  But  there  are  wide  areas  of  activity  in 
which  their  interests  coincide.  It  is  the  part  of  statesmanship  to 
organize  identity  of  interest  where  it  exists  in  order  to  reduce  the  area 
of  conflict.  The  representative  principle  is  needed  to  make  effective 
the  employee's  interest  in  production,  as  well  as  in  wages  and  working 
conditions.  It  is  likewise  needed  to  make  more  efifective  the  em- 
ployer's interest  in  the  human  element  of  industry. 

The  idea  of  employee  representation  has  aroused  opposition  from 
two  sources.  On  the  one  hand,  in  plants  too  large  for  direct  per- 
sonal contact,  employers  who  still  adhere  to.  the  theory  that  labor  is 
a  commodity,  hold  ofif  from  any  form  of  cooperation  with  employees. 
This  view  is  steadily  disappearing  and  will,  it  is  hoped,  wholly  dis- 
appear. On  the  other  hand,  a  number  of  trade  union  leaders  regard 
shop  representation  as  a  subtle  weapon  directed  against  the  union. 
This  thought  is  apparently  based  on  the  fear  that  it  may  be  used  by 
some  employers  to  undermine  the  unions.  Conceived  in  that  spirit  no 
plan  can  be  a  lasting  agency  of  industrial  peace. 

But  occasional  misuse  of  employee  representation  and  the  conse- 
quent hesitancy  of  organized  labor  to  endorse  it  otTicially,  are  based 
on  a  misconception  of  the  possible  and  desirable  relations  between  the 
union  and  the  shop  committee.  This  relation  is  a  complementary,  and 
not  a  mutually  exclusive  one.  In  many  plants  the  trade  union  and 
the  shop  committee  arc  both  functioning  harmoniously.  In  some  estab- 
lishments the  men  are  unionized,  and  the  shop  committees  are  com- 
posed of  union  men.  In  others,  some  men  belong  to  the  trade  union 
while  all  belong  to  the  shop  organization. 

The  union  has  had  its  greatest  success  in  dealing  with  basic  working 
conditions,  and  with  the  general  level  of  wages  in  organized  and 
partially  organized  industries  and  crafts.  It  has  also  indirectly  ex- 
erted an  influence  on  standards  in  unorganized  trades.  There  is  no 
reason  to  suppose  that  in  the  future  this  influence  will  not  continue. 

Local  problems,  hf)wever,  fall  naltn-ally  within  the  ])rovincc  of  shop 
committees.  No  organization  covering  the  whole  trade  and  unfamiliar 
with   special   local   conditions  and  the  questions  that   come   up    from 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  11 

(Jay  to  day,  is  by  itself  in  a  position  to  deal  with  these  questions  ade- 
quately, or  to  enlist  the  cooperation  of  employer  and  employee  in 
methods  to  improve  production  and  to  reduce  strain.  Except  for 
trades  in  which  the  union  itself  has  operated  under  a  system  of  em- 
ployee representation,  as  it  does  in  shipbuilding  and  in  the  manufacture 
of  clothing  and  in  other  trades,  these  internal  factors  are  likely  either  to 
be  neglected  or  to  be  dealt  with  in  a  way  which  does  not  make  for 
satisfactory  cooperation. 

The  existence  of  employee  representation  in  plants  operating  under 
union  agreement  does  not  necessarily  reduce  the  scope  of  the  union 
representative's  work.  But  matters  are  more  likely  to  come  to  him  as 
questions  of  the  application  of  an  agreement  rather  than  as  mere  griev- 
ances. In  other  words  he  has  greater  opportunity  for  service  in 
negotiation  of  an  essentially  conciliatory  nature.  The  fortunate  results 
of  such  development  have  been  evident  in  industries  in  which  employee 
representation  and  trade  unions  have  for  some  time  been  functioning 
harmoniously. 

Employee  representation  must  not  be  considered  solely  as  a  device 
for  settling  grievances.  It  can  find  success  only  if  it  also  embodies  co- 
operation in  the  problem  of  production.  Whatever  subjects  the  rep- 
resentatives come  to  feel  as  having  a  relation  to  their  work,  and 
their  effectiveness  as  members  of  the  plant,  may  come  within  the  field 
of  committee  consideration.  It  is  a  thing  to  be  undertaken,  if  at 
all,  in  a  thoroughgoing  way.  Representatives  must  be  selected  by 
the  employees  with  absolute  freedom.  In  order  to  prevent  sus- 
picion on  any  side,  selection  should  be  by  secret  ballot.  There  must  be 
equal  freedom  of  expression  thereafter.  All  employees  must  feel  abso- 
lutely convinced  that  the  management  will  not  discriminate  against  them 
in  any  way  because  of  any  activities  in  connection  with  shop  commit- 
tees. Meetings  should  be  held  frequently  and  regularly,  not  merely 
when  specific  disputes  are  threatened.  Both  sides  must  be  prepared 
to  study  the  oroblems  presented  and  must  give  them  patient,  serious 
and  open-minded  consideration.  There  should  be  made  available 
those  facilities  and  facts  essential  to  the  formation  of  soundly  based 
conclusions. 

Employee  representation  offers  no  royal  road  to  industrial  peace. 
No  employer  should  suppose  that  merely  by  installing  some  system 
of  shop  representation  he  can  be  assured,  without  continued  efifort. 
of  harmony  and  increased  production.  Doubtless  there  will  be  failures 
where  the  plan  is  adopted  as  a  fad  or  a  panacea.  It  is  only  a  means 
whereby  sincerity  of  purpose,  frank  dealing  and  the  establishment  of 
common  interests,  may  bring  mutual  advantage. 

The  development  and  maintenance  of  right  relations  between 
employer    and     employee     require     more    than     mere    organization. 


12  INDUSTRIAL     CONFERENCE     CALLED     BY     THE    PRESIDENT. 

Intelligent  and  wise  administration  is  needed  of  all  those  prob- 
lems of  production  that  directly  touch  the  employee.  Conditions 
affecting  human  beings  in  industry  were,  during  the  last  genera- 
tion, largely  in  charge  of  men  whose  special  training  had  been  devoted 
to  the  mechanical  side  of  production.  ^luch  study  was  given  to  the 
machinery  and  processes  upon  which  men  worked.  But  the  factors 
that  contribute  to  the  broader  human  development  and  satisfaction 
of  the  employee  and  that  lead  to  increased  productivity  were  too 
nearly  neglected.  The  elimination  of  human  friction  is,  even  from 
the  point  of  view  of  increased  production,  at  least  no  less  important 
than  the  elimination  of  waste  in  materials,  or  in  mechanical  power. 

Establishments  in  which  the  ultimate  management  is  of  necessity 
widely  removed  from  the  employees,  require  provision  for  specialized 
study  of  industrial  relations.  But  the  right  concept  of  human  relations 
in  industry,  w^hich  should  be  the  primary  impulse  of  management,  is  of 
full  value  only  when  it  permeates  the  entire  administrative  force.  Far- 
sighted  executives  testify  to  the  advantage  gained  from  careful  and 
painstaking  efforts  to  encourage  and  educate  their  foremen  in  the 
proper  attitude  toward  employees. 

A  large  proportion  of  men  trained  in  our  engineering  and  technical 
schools  now  pass  into  executive  positions.  It  is,  therefore,  desirable 
that  these  schools  should  provide  courses  of  instruction  in  which  the 
psychological  and  industrial  background  for  human  relations  work 
shall  be  developed.  But  no  amount  of  education  outside  the  plant 
will  remove  the  need  for  the  systematic  training  of  the  force  within. 

Some  industries  have  extended  the  principles  of  employee  repre- 
sentation beyond  the  individual  plant.  The  voluntary  joint  councils 
which  have  thus  been  set  up  in  the  clothing  industry,  in  the  printing 
trade,  and  elsewhere  are  fruitful  experiments  in  industrial  organiza- 
tion. 

'J'he  Conference  has  had  the  benefit  of  testimony  from  both  em- 
ployers and  employees  who  have  had  experience  of  the  results  of  em- 
ployee representation.  An  enthusiasm  has  been  shown  which  comes 
from  a  sincere  feeling  of  substantial  progress  in  the  development  of 
human  relations. 


<^, 


I     1/.  -^■^' 


INDUSTRIAL     CONFERENCE    CALLED     BY     THE     PRESIDENT.  13 

III.    PLAN  FOR  ADJUSTMENT  OF  DISPUTES. 

GENERAL  DESCRIPTION. 

1.     PROCEDURE   WHEN    BOTH    SIDES    VOLUNTARILY    SUBMIT 
DISPUTES    FOR   ADJUSTMENT. 

The  United  States  shall  be  divided  into  a  specified  number  of 
industrial  regions,  in  each  of  which  there  shall  be  a  chairman. 

Whenever  a  dispute  arises  in  a  region,  which  can  not  be  settled 
by  existing  machinery,  the  regional  chairman  may  request  each  side 
to  submit  the  dispute  to  a  Regional  Adjustment  Conference,  to  be 
composed  of  two  representatives  from  each  side,  parties  to  the  dispute, 
and  1^0  representatives  to  be  selected  by  each  side  from  the  panels 
herein  provided  for.  The  regional  chairman  shall  preside  but  not 
vote  at  the  Conference. 

If  the  Conference  reaches  a  unanimous  agreement  it  shall  be 
regarded  as  a  collective  bargain  between  the  parties  to  the  dispute 
and  shall  have  the  force  and  effect  of  a  trade  agreement.  If  the  Con- 
ference does  not  reach  an  agreement  and  the  disagreement  relates  to 
wages,  hours  or  working  conditions,  it  shall  make  a  finding  of  the 
material  facts,  and  state  the  reasons  why  it  was  unable  to  reach  an 
agreement.  The  regional  chairman  shall  report  such  finding  and 
statement  to  the  National  Industrial  Board  herein  provided  for, 
which  shall  determine  the  matters  so  submitted  as  arbitrator.  If  the 
National  Industrial  Board  shall  reach  a  unanimous  agreement,  it  shall 
report  its  determination  back  to  the  Regional  Adjustment  Confer- 
ence,-which  shall  in  accordance  therewith  state  the  agreement  between 
the  parties  to  the  dispute  the  same  as  if  the  Conference  had  reached 
a  unanimous  conclusion.  If  the  National  Industrial  Board  shall  fail 
to  reach  a  unanimous  conclusion,  it  shall  make  majority  and  minority 
reports  and  transmit  them  to  the  regional  chairman,  who  shall  imme- 
diately publish  such  reports,  or  such  adequate  abstracts  thereof,  as  may 
be  necessary  to  inform  the  public  of  the  material  facts  and  the 
reasons  why  the  Board  was  unable  to  reach  an  agreement. 

If  the  Conference  does  not  reach  an  agreement  and  its  disagree- 
ment relates  to  matters  other  than  wages,  hours,  or  working  conditions, 
it  shall  make  and  publish  its  report,  or  majority  and  minority  reports 
stating  the  material  facts  and  the  reasons  why  it  was  unable  to  reach 
an  agreement. 

If  the  parties  to  the  dispute  so  desire,  they  may  select  an  umpire  to 


14  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

act  as  arbitrator  in  place  of  the  National  Industrial  Board,  and  in  such 
case,  the  determination  of  the  umpire  shall  be  transmitted  to  the 
Regional  Adjustment  Conference  with  the  same  force  and  effect  as 
a  determination  by  the  National  Industrial  Board. 

The  appointment  of  representatives  to  the  Regional  Conference 
constitutes  a  voluntary  agreement,  (a)  that  there  shall  be  no  cessation 
of  production  during  the  processes  of  adjustment,  (b)  to  accept  as  an 
effective  collective  bargain  the  unanimous  agreement  of  the  Regional 
Adjustment  Conference,  (c)  to  accept  as  an  eft'ective  collective  bargain, 
(in  case  of  failure  of  the  Regional  Adjustment  Conference)  the  deci- 
sion of  a  mutually  chosen  umpire,  (d)  to  accept  as  an  effective  collec- 
tive bargain,  (in  case  of  failure  of  the  Regional  Adjustment  Con- 
ference, or  upon  failure  of  the  parties  to  agree  upon  an  umpire)  the 
unanimous  decision  of  the  National  Industrial  Board  upon  wages, 
hours  and  working  conditions. 

2.     PROCEDURE   WHEN   THERE   IS   NO   VOLUNTARY 
SUBMISSION. 

If  both  parties  to  the  dispute  refuse  to  submit  it  to  a  Regional 
Adjustment  Conference  through  the  failure  to  appoint  representatives 
within  the  time  allowed,  the  chairman  shall  organize  forthwith,  a 
Regional  Board  of  Inquiry,  consisting  of  two  employers  from  the 
top  of  the  employers'  panel  for  the  industry  concerned,  and  two 
employees  from  the  top  of  the  employees'  panel  for  the  craft  or  crafts 
concerned.  The  four  so  chosen  with  the  chairman  shall  constitute 
the  Board  of  Inquiry. 

If  either  side  shall  have  selected  representatives,  and  thereby  agreed 
to  submit  to  the  process  of  adjustment  of  the  dispute,  such  rep- 
resentatives may  select  two  names  from  their  panel  in  the  same 
manner  as  for  a  Regional  Adjustment  Conference.  Such  representa- 
tives of  the  party  to  the  dispute,  may  sit  on  the  Board  of  Inquiry  and 
take  full  part  as  members  thereof.  The  six  thus  selected,  with  the 
chairman,  shall  thereafter  constitute  the  Board  of  Inquiry. 

The  Board  of  Inquiry  shall  proceed  forthwith  to  investigate  the 
dispute,  and  make  and  publish  its  report,  and  if  not  in  agreement,  its 
majority  and  minority  reports,  in  order  that  the  public  may  know  the 
facts  material  to  the  dispute,  and  the  points  of  difference  between  the 
parties  to  it. 


INDUSTRIAL    CONFERENCE    CALLED    BV    THE    PRESIDENT.  15 

DETAILS  OF  THE  PLAN. 

1.     NATIONAL   AND    REGIONAL   BOARDS. 

There  shall  be  established  a  National  Industrial  Board,  Regional 
Adjustment  Conferences  and  Boards  of  Inquiry. 


2.     NATIONAL  INDUSTRIAL   BOARD. 

The  National  Industrial  Board  shall  have  its  headquarters  in 
Washington,  and  shall  be  composed  of  nine  members  appointed  by  the 
President  and  confirmed  by  the  Senate.  In  order  to  insure  appointment 
upon  such  Board  of  persons  familiar  with  industrial  questions  and 
capable  of  estimating  the  effect  of  the  decisions  rendered,  three  shall 
be  chosen  from  persons  representative  of  industrial  employers,  three 
from  persons  representative  of  industrial  employees,  and  three  from 
persons  representative  of  general  interests,  wiio  shall  be  specially  quali- 
fied by  reason  of  knowledge  or  experience  with  economic  and  general 
(questions.  All  shall  act  for  the  general  welfare  and  shall  be  selected 
without  regard  to  political  affiliations.  One  of  the  three  persons  repre- 
sentative of  general  interests  shall  be  designated  by  the  President  as 
chairman. 

The  terms  of  office  of  members  of  the  National  Industrial  Board 
shall  be  six  years ;  at  the  outset  three  members,  including  one  from 
each  group,  shall  be  appointed  for  a  term  of  two  years,  three  members 
for  a  term  of  four  years,  and  three  members  for  a  term  of  six  years ; 
thereafter  three  members,  one  from  each  group,  shall  retire  at  the 
end  of  each  period  of  two  years.  Members  shall  be  eligible  for  re- 
appointment. 

The  Board  shall  have  general  supervisory  power  over,  and  shall 
make  rules  governing  the  general  administration  of  the  plan.  It  may, 
in  its  discretion,  require  the  regional  chairman  to  take  cognizance  of  a 
dispute  and  to  institute  the  regional  machinery  to  deal  with  the  same ; 
it  may  also  suspend  the  operation  of  the  regional  machinery  in  case 
the  regional  chairman  shall  have  set  the  same  in  motion  under  cir- 
cumstances which  the  National  Industrial  Board  disapproves.  It  shall 
act  as  a  board  of  appeal  on  questions  of  wages,  hours  and  working 
conditions  which  cannot  be  adjusted  by  a  Regional  Adjustment  Con- 
ference, and  in  such  cases  it  shall  act  by  unanimous  vote.  It  may 
act  as  a  board  of  appeal  on  all  other  questions  which  may  come  before 
a  Regional  Adjustment  Conference,  which  may  be  voluntarily  sub- 
mitted to  it  by  the  parties  to  the  dispute  and  which  they  h^xe  not  been 


16  INDUSTRIAL     CONFERENCE    CALLED    BV    THE    PRESIDENT. 

able  to  agree  upon  in  the  Regional  Adjustment  Conference,  except 
questions  of  policy  such  as  the  "closed"  or  "open"  shop.  In  such 
cases,  it  shall  act  by  such  vote,  unanimous  or  otherwise,  as  the  sub- 
mission shall  specify.  In  case  it  is  unable  to  reach  a  determination,  it 
shall  make  and  cause  to  be  published,  majority  and  minority  reports. 
Such  reports  shall  be  m'atters  of  public  record. 

On  all  administrative  questions,  the  Board  may  act  by  majority  vote. 

In  order  to  facilitate  its  business,  the  Board  may,  in  the  less  impor- 
tant cases,  subdivide  into  parts  of  three,  constituted  of  one  member 
from  each  group. 

In  the  event  that  the  facts  transmitted  to  it  by  the  chairman  of  the 
Regional  Adjustment  Conference  are,  in  the  opinion  of  the  Board, 
inadequate  to  enable  it  to  make  a  decision,  the  Board  shall  send  the 
case  back  to  the  regional  chairman  with  instructions  to  secure  such 
further  facts  as  may  be  needed.  If  the  representatives  of  the  parties 
to  the  dispute  are  in  agreement  upon  the  facts  required,  the  chairman 
shall  then  secure  and  communicate  to  the  National  Industrial  Board 
such  facts ;  or,  (in  case  of  their  failure  to  agree)  he  shall  reconvene  the 
Regional  Adjustment  Conference  for  the  purpose  of  making  a  sup- 
plementary report  concerning  the  needed  facts.  The  National  Indus- 
trial Board  shall  have  no  right  of  inquiry  and  no  power  to  subpoena. 
When  the  Board  finds  it  necessary  to  call  for  additional  facts,  as  just 
indicated,  the  time  for  the  decision  of  the  case  by  the  Board  may  be 
extended,  if  necessary,  for  the  purpose  of  obtaining  the  requisite  facts. 


3.     REGIONAL    CHAIRMEN    AND    VICE-CHAIRMEN. 

In  each  region  the  President  shall  appoint  a  regional  chairman.  He 
shall  be  a  representative  of  the  public  interest,  shall  be  appointed  for 
a  term  of  three  years  and  be  eligible  for  reappointment. 

Whenever  in  any  industrial  region,  because  of  the  multiplicity  of 
disputes,  prompt  action  is  impossible,  or  where  the  situation  makes  it 
desirable,  the  National  Industrial  Board  may,  in  its  discretion,  choose 
one  or  more  vice-chairmen  and  provide  for  the  establishment  under 
iheir  chairmanship  of  addilioital  l\(>gional  Conferences  or  Boards  of 
Inquiry.  'J'hc  terms  of  office  of  such  vice-chairmen  shall  be  limited  to 
the  consideration  of  the  specified  cases  for  which  they  are  appointed. 


4.  PANELS  OF  EMPLOYERS  AND  EMPLOYEES  FOR  REGIONAL 

BOARDS. 

Panels  of  employers  and  employees  for  each  region  shall  be  pre- 
pared by  the   .Secretary   of   Commerce  and   the   Secretary  of   Labor, 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  17 

respectively,  after  conference  with  the  emplo3^ers  and  employees, 
respectively,  of  the  regions.  The  panels  shall  be  approved  by  the 
President. 

At  least  30  days  before  their  submission  to  the  President,  provisional 
lists  for  the  panels  in  each  region  shall  be  published  in  such  region. 

The  panels  of  employers  shall  be  classified  by  industries  ;  the  panels 
of  employees  shall  be  classified  by  industries  and  subclassified  by 
crafts.  The  names  of  employers  and  employees  selected  shall  be  at 
first  entered  on  their  respective  panels  in  an  order  determined  by  lot. 

The  selection  from  the  panels  for  service  upon  the  Regional  Boards 
shall  be  made  in  rotation  by  the  regional  chairman ;  after  service  the 
name  of  the  one  so  chosen  shall  be  transferred  to  the  foot  of  his  panel. 

The  regional  panels  shall  be  revised  annually  by  the  Secretaries  of 
Commerce  and  of  Labor,  respectively,  in  conference  with  the  em- 
ployers and  employees,  respectively,  of  each  region. 


5.     DETAILED   PROCEDURE   OF   REGIONAL   ADJUSTMENT 
CONFERENCE. 

Cognizance  of  Disputes. 

The  regional  chairman  shall  not  take  cognizance  of  a  dispute  unless 
he  is  satisfied  that  it  cannot  be  settled  by  agreement  of  the  parties,  or 
by  existing  machinery.  If  request  be  made  by  a  party  to  a  dispute  that 
cognizance  be  taken  of  it,  the  regional  chairman  shall  require  the  pre- 
sentation of  satisfactory  evidence  that  an  attempt  has  been  made  in 
good  faith  to  settle  the  dispute  by  agreement  of  the  parties,  or  by 
existing  machinery,  before  requesting  the  other  side  to  submit  the  dis- 
pute to  a  Regional  Adjustment  Conference. 

Submission. 

When  the  chairman  shall  have  decided  to  take  cognizance  of  the 
dispute,  he  shall  request  each  party  to  it  to  select  two  representatives 
within  such  time,  (not  less  than  two  nor  more  than  seven  days)  as  may 
be  fixed  by  the  chairman. 

The  appointment  of  representatives  by  both  sides  shall  constitute 
an  agreement  that  the  parties  will  endeavor  in  good  faith  to  adjust 
the  dispute  as  members  of  the  Regional  Adjustment  Conference,  and 
that  in  case  of  failure  of  the  Conference  to  agree  unanimously,  they 
will  accept  the  award  of  the  National  Industrial  Board,  or  of  an  umpire 
selected  by  them,  on  any  question  relating  to  wages,  hours  and  working 
conditions,  as  herein  provided.  It  shall  also  constitute  an  agreement 
by  both  sides  that  they  will  continue,  or  re-establish  and  continue,  until 


18  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

the  case  is  concluded,  the  status  that  existed  at  the  time  the  dispute 
arose. 

Selection  of  Representatives. 

The  selection  of  representatives  of  parties  to  the  dispute  shall  be 
made  in  accordance  with  rules  laid  down  by  the  National  Industrial 
Board  for  the  purpose  of  insuring  free,  prompt  and  unrestricted  choice 
of  such  representatives. 

In  case  either  side  shall  object  to  the  representatives  of  the  other, 
on  the  ground  that  they  are  not  in  fact  representative,  the  chairman  shall 
pass  upon  such  objection,  or  he  may  call  in  some  competent  person 
to  do  so.  If  the  chairman  is  in  doubt  as  to  whether  the  representatives 
objected  to  are  in  fact  representative,  he  shall  require  that  formal  action 
be  taken  by  the  employer  to  select,  and  properly  certify  to  the  selection 
of  his  representatives,  and  likewise,  unless  otherwise  provided  by  the 
National  Industrial  Board,  he  shall  require  the  employees  to  elect  their 
representatives  by  secret  ballot,  under  the  direction  of  some  impartial 
person,  designated  by  the  chairman. 

Selection  From  the  Panels. 

When  both  sides  shall  have  selected  their  representatives,  the 
chairman  shall  take  from  the  top  of  the  panels  for  the  industry  con- 
cerned, or  in  the  case  of  employees,  for  the  craft  or  crafts  concerned, 
twelve  names  of  employers  and  employees  respectively.  The  repre- 
sentatives of  the  two  sides  shall  choose  two  each  from  the  twelve 
names  on  their  respective  panels. 

Formation  of  Regional  Adjustment  Conference. 

The  chairman  shall  forthwith  convene  a  Regional  Adjustment  Con- 
ference composed  of  the  four  representatives  of  the  parties  to  the 
dispute,  the  four  persons  selected  from  the  panels  and  the  chair- 
man, and  so  constituted,  the  Conference  shall  proceed  at  once  to  nego- 
tiate an  adjustment  of  the  dispute. 

Ascertainment  of  Facts. 

The  Regional  Adjustment  Conference  shall  not  have  the  right  of 
inquiry,  or  the  power  to  subpoena,  but  shall  obtain  its  facts  through  the 
voluntary  action  of  the  j)arties  to  the  dispute. 

If  no  agreement  is  reached  by  the  Conference,  and  in  the  opinion 
of  the  chairman  additional  information  is  required  to  make  a  report 
to  the  National  Industrial  Board  or  to  an  umpire,  the  Regional  Adjust- 
ment C^onferencc  shall,  at  that  linic  and  fur  that  purjiose,  have  all  the 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  19 

l)ovvers  of  inquiry  and  right  to  subpoena  which  are  vested  in  the  Re- 
gional Board  of  Inquiry.  Such  right  shall  continue  for  the  purpose 
of  ascertaining  any  further  material  facts  which  the  National  Industrial 
Board  or  the  umpire  may  require. 


6.     POWERS  AND  DUTIES  OF  REGIONAL  BOARD  OF  INQUIRY. 

Organization  of  Regional  Board  of  Inquiry. 

If  both  parties  to  the  dispute,  or  either  party,  refuse  to  submit  it  to 
a  Regional  Adjustment  Conference,  the  chairman  shall  organize  forth- 
with a  Regional  Board  of  Inquiry,  as  hereinbefore  described,  {cf. 
supra,  page  14,  section  2). 

Right  to  Subpoena  and  Examination. 

The  Regional  Board  of  Inquiry  shall  have  the  right  to  subpoena 
witnesses,  to  examine  them  under  oath,  and  to  require  the  production  of 
books  and  papers,  in  order  to  enable  the  Board  to  ascertain  all  facts 
material  to  the  dispute  and  a  clear  understanding  of  the  issues  involved. 

Reports. 

The  report  or  reports  of  a  Board  of  Inquiry  shall,  in  addition  to 
being  made  public  by  the  chairman,  be  transmitted  to  the  Secretaries 
of  Commerce  and  Labor  respectively,  and  shall  be  filed  with  the 
National  Industrial  Board,  and  with  the  chairman  of  each  and  every 
region,  where  they  shall  be  matters  of  public  record. 

Right  of  the  Chairman  to  Vote. 

The  chairman  shall  have  the  right  to  vote  on  all  matters  coming 
before  the  Board  of  Inquiry  and  he  may  in  his  discretion  join  in  any 
report  or  reports  of  the  Board. 


7.     TRANSFORMATION      OF      THE      REGIONAL      BOARDS      OF 
INQUIRY    INTO    REGIONAL    ADJUSTMENT    CONFERENCES. 

At  any  time  during  the  progress  of  the  inquiry  if  both  sides  shall 
have  selected  representatives,  and  agreed  to  submit  the  dispute  for 
adjustment,  the  Board  of  Inquiry  shall  become  a  Regional  Adjustment 
Conference  by  the  admission  to  membership  on  the  Board  of  such 
representatives.  The  side  or  sides  which  appoint  representatives,  after 
the  date  fixed  in  the  original  request  of  the  chairman,  shall,  (because 
of  its  delay)  accept  the  members  of  the  Board  of  Inquiry  as  members 
of  the  Regional  Adjustment  Conference. 


20  INDUSTRIAL     CONFERENCE    CALLED     BY     THE    PRESIDENT. 

The  Regional  Adjustment  Conference,  so  constituted,  shall  proceed 
to  the  settlement  of  the  dispute  as  though  it  had  been  organized 
within  the  period  originally  fixed  by  the  chairman. 


8.     UMPIRE. 

When  a  Regional  Adjustment  Conference  is  unable  to  reach  a 
unanimous  agreement,  the  representatives  of  the  parties  to  the  dis- 
pute may  select  an  umpire,  and  refer  the  dispute  to  him  with  the 
provision  that  his  determination  shall  be  final,  and  shall  have  the 
same  force  and  effect  as  a  unanimous  agreement  of  such  Regional 
Adjustment  Conference.  All  questions,  even  those  including  the 
"  open  "  and  "  closed  "  shop,  may  be  referred  by  the  parties  to  an 
umpire. 

9.     COMBINATION    OF    REGIONS. 

Whenever  the  questions  involved  in  a  dispute  extend  beyond  the 
boundaries  of  a  single  region,  the  regions  to  which  the  dispute  extends 
shall,  for  the  purpose  of  such  dispute,  be  combined  by  order  of  the 
National  Industrial  Board,  which  shall  designate  the  chairman  of  one 
of  the  regions  concerned,  to  act  as  chairman  of  the  Adjustment  Con- 
ference, or  Board  of  Inquiry,  to  be  created  in  connection  with  the 
dispute  in  question. 

Two  employer  members  and  two  employee  members  shall  be 
chosen  from  the  combined  panels  of  the  regions  involved  in  the  dispute, 
under  rules  and  regulations  to  be  established  by  the  National  Industrial 
Board.  The  members  representing  the  two  sides  to  the  dispute,  and  the 
members  from  the  panels,  shall  be  chosen  in  the  same  manner  as 
in  the  case  of  a  disi)ute  in  a  single  region.  The  National  Industrial 
Board  shall  prescribe  rules  and  regulations  for  the  combination  of  the 
panels,  and  the  effective  adaptation  of  the  other  machinery  created 
for  use  in  tlie  ccjnibincd  regions. 

A  Regional  Pjoard  of  Inquiry  constituted  for  a  dispute  extending 
bey(jnd  the  boundaries  of  a  single  region  shall  have  the  same  rights 
and  powers  as  those  conferred  upon  a  Regional  Board  of  Inquiry  for 
a  single  region. 


10.     TIME    OF    REPORTING    FINDINGS. 

Any  Regional  Bijard  of  Inquiry  .shall  make  and  publish  its  report 
within  five  days  after  the  close  of  its  hearing,  and  within  not  more 
than  30  days  from  the  date  of  issue  of  the  original  request  by  the 
chairman  to  the  two  sides  to  the  dispute  to  appoint  representatives. 


INDUSTRIAL     CONFERENCE    CALLED    BY    THE    PRESIDENT.  21 

Any  Regional  Adjustment  Conference  shall  make  its  determination 
of  any  question  in  dispute,  or  if  unable  to  make  a  determination,  shall 
make  its  report  to  the  National  Industrial  Board,  or  to  an  umpire, 
if  one  shall  have  been  selected,  within  5  days  after  the  close  of  its 
hearing,  and  within  not  more  than  30  days  from  the  time  of  the  ap- 
pointment of  the  representatives  of  the  parties  to  the  dispute.  If 
the  failure  to  make  a  determination  relates  to  matters  not  appealable 
to  the  National  Industrial  Board,  and  in  case  no  umpire  has  been 
selected,  the  Regional  Adjustment  Conference  shall,  within  the  30 
days  above  specified,  make  and  publish  its  report  or  reports.  The 
periods  above  specified  may  be  extended  by  unanimous  agreement  of 
the  Conference,  or  by  the  National  Industrial  Board. 

The  National  Industrial  Board,  or  any  umpire,  shall  determine  any 
pending  question  in  dispute  within  15  days  after  the  report  of  the 
Regional  Adjustment  Conference  shall  have  been  submitted. 


11.     EFFECT   OF   DECISION. 

Whenever  an  agreement  is  reached  through  a  Regional  Adjust- 
ment Conference,  or  the  National  Industrial  Board,  or  an  umpire,  it 
shall  have  the  full  force  and  effect  of  a  trade  agreement,  which  the 
parties  to  the  dispute  are  bound  to  carry  out. 

12.     APPLICATION    OF    AWARDS. 

Any  question  arising  as  to  the  true  meaning  or  application  of  any 
such  agreement  shall  be  determined  by  the  representatives  of  the  parties 
to  the  dispute  on  the  Regional  Adjustment  Conference  before  which 
the  dispute  was  heard.  In  case  of  disagreement,  such  representatives 
shall,  unless  otherwise  provided  in  the  agreement,  submit  in  writing 
the  question  to  the  chairman  of  such  Board,  whose  decision  shall  be 
final. 


13.     PROCEDURE  ON  FAILURE  TO  COMPLY  WITH  AN  AWARD. 

Upon  complaint  that  either  party  has  failed  to  comply  with  an 
agreement,  the  chairman  of  the  Regional  Adjustment  Conference  be- 
fore which  the  dispute  was  heard,  shall  call  in  one  employer  and  one 
employee  member  of  such  Conference,  not  parties  to  the  dispute, 
selected  in  the  order  of  their  position  on  the  panel  at  the  time  such 
Conference  was  created,  and  the  board  of  three  thus  constituted  shall, 
by  majority  vote,  determine  whether  or  not  there  has  been  a  failure  to 
comply  with  the  agreement,  and  shall  make  its  determination  public. 


22  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 


14.     RELATION    OF    BOARDS    TO    EXISTING    MACHINERY    FOR 
CONCILIATION   AND    ADJUSTMENT. 

The  establishment  of  the  National  Industrial  Board  and  the 
Regional  Adjustment  Conference  shall  not  affect  existing  machinery  of 
conciliation,  adjustment  and  arbitration  established  by  the  Federal  Gov- 
ernment, by  the  governments  of  the  several  states  and  territories  or 
subdivisions  thereof,  or  by  mutual  agreements  of  employers  and  em- 
ployees. 

Any  industrial  agreement  made  between  employers  and  employees 
may,  by  consent  of  the  parties,  be  filed  with  the  National  Industrial 
Board.  Such  filing  shall  constitute  agreement  by  the  parties  that  in 
the  event  of  a  dispute,  they  will  maintain  the  status  existing  at  the  time 
the  dispute  originated  until  a  final  determination,  and  that  any  dispute 
not  adjusted  by  means  of  the  machinery  provided  by  the  agreement, 
shall  pass  on  appeal  to  the  National  Industrial  Board  for  determination, 
and  that  such  determination  shall  be  of  the  same  questions  and  shall 
have  the  same  force  and  effect  as  in  the  case  of  a  dispute  on  appeal 
from  a  Regional  Adjustment  Conference. 


15.     GENERAL    PROVISIONS. 

The  President  shall  have  the  power  of  removal  of  all  persons  ap- 
pointed by  him  under  the  provisions  of  the  plan. 

In  the  presentation  of  evidence  to  the  Board  of  Inquiry,  and  in 
argument  before  the  National  Industrial  Board  or  an  umpire,  each  side 
shall  have  the  right  to  present  its  position  through  representatives  of  its 
own  choosing. 

The  Secretary  of  Commerce  and  the  Secretary  of  Labor,  in  pre- 
paring and  revising  the  regional  panels  of  employers  and  employees, 
shall,  from  time  to  time,  develop  suitable  systems  to  insure  their  selec- 
tions being  truly  representative. 

The  National  Industrial  Board,  the  l^egional  Adjustment  Confer- 
ences and  the  um])ircs  shall,  in  each  of  (heir  determinations,  specify  the 
mininuim  period  during  which  such  determination  shall  be  effective 
and  binding.  In  case  of  emergency,  a  Regional  Adjustment  Confer- 
ence or  the  National  Industrial  Board  may,  after  hearing  both  sides, 
alter  its  detcrnu'nation  by  abridging  or  extending  the  period  specified. 

In  case  of  vacancy  in  any  office  or  position  created  under  this  plan, 
such  vacancy  shall  he  filled  for  the  unexpired  term,  in  the  same  man- 
ner as  the  original  selections  were  made,  provided,  however,  that  if 
the  vacancy  occurs  in  the  position  of  representatives  of  parties  to  a 
dispute,  such  vacancy  may  be  filled  by  joint  agreement  of  the  parties. 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  23 

Whenever  an  agreement  shall  he  reached  through  a  Regional  Ad- 
justment Conference,  it  shall  he  executed  in  four  originals,  two  of 
which  shall  be  given  to  the  parties  to  the  dispute,  respectively;  one 
shall  be  filed  with  the  National  Industrial  Board  and  one  shall  be  filed 
in  the  office  of  the  chairman  of  the  region  in  which  the  agreement  was 
reached.  The  agreements  filed  with  the  National  Industrial  Board  and 
with  the  chairman  shall  be  public  records. 

The  National  Industrial  Board  shall  from  time  to  time  make  suitable 
rules  and  regulations  for  the  purpose  of  carrying  out  this  plan,  includ- 
ing regulations  for  the  privacy  of  any  information  disclosed  by  a  party, 
which  information,  although  necessary  and  proper  for  a  decision  of  the 
matter  in  hand,  may,  by  its  public  disclosure  to  the  Board,  umpire  or 
Conference,  injure  one  or  more  of  the  parties. 

The  National  Industrial  Board  shall  also  from  time  to  time,  as 
experience  in  the  operation  of  the  plan  shows  to  be  desirable,  issue 
instructions  to  the  regional  chairmen  concerning  the  character  of  dis- 
putes of  which  they  should  take  cognizance,  in  order  that  the  plan  may 
best  serve  the  public  interest. 

No  agreement  of  any  Regional  Adjustment  Conference  shall  be 
effective  for  any  purpose  if  the  saiiie  be  in  violation  of  any  law  of  the 
United  States  or  of  any  state  in  which  such  agreement  is  to  be  applied. 

The  National  Industrial  Board  may,  whenever  it  deems  it  desirable, 
request  one  employer  representative  and  one  employee  representative, 
members  of  the  Regional  Adjustment  Conference,  not  parties  to  the 
dispute,  to  assist  it  in  arriving  at  a  clear  understanding  of  any  technical 
questions  involved  in  the  dispute,  and  in  framing  its  report.  Such 
representatives  shall  not  participate  in  the  decision  of  any  question. 


16.     BASIS   OF   DECISIONS. 

Whenever  a  Board  of  Inquiry  inquires  into,  or  a  Regional  x^djust- 
ment  Conference  adjusts,  a  dispute  relating  to  wages,  hours  of  labor 
or  working  conditions,  it  must  inquire  into  the  conditions  prevailing 
in  the  industry,  and  its  findings  or  decision,  as  the  case  may  be,  must 
he  such  that  the  standards  recommended  or  decided  upon  may  with 
fairness  be  applied  to  the  entire  industry,  making  due  allowance  for 
modifications  which  should  be  made  on  account  of  the  local  condi- 
tions, including  competitive  relations  and  living  conditions,  at  the  par- 
ticular plant  or  plants  to  which  the  report  or  award  is  to  be  applied. 


24  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 


17.     PROTECTION  OF  INFORMATION. 

Any  information  obtained  by  any  Board,  Conference  or  umpire  in 
the  course  of  any  inquiry  or  hearing  as  to  any  individual  business, 
(whether  carried  on  by  a  person,  firm  or  company)  which  is  not  avail- 
able to  the  public,  shall  not  be  made  public,  except  with  the  consent  of 
the  owner  of  such  business,  provided,  however,  that  this  shall  not 
prevent  such  general  statement  as  may  be  necessary  to  inform  the 
public  of  the  issues  involved  in  the  dispute. 

No  individual  member  of  such  Boards  or  Conferences,  and  no 
umpire  or  other  person  obtaining  information  in  any  manner  through 
their  proceedings,  shall  disclose,  or  in  any  way  use  such  information 
except  in  connection  with  his  official  action  to  accomplish  the  pur- 
poses of  the  plan. 

Suitable  penalties  should  be  provided  for  any  violation  of  this 
provision. 

PUBLIC  UTILITIES. 

The  plan  as  above  outlined  for  general  industry  shall  be  modified 
as  set  forth  below,  and  shall  be  applicable  to  public  utilities  other  than 
those  carriers  provided  for  by  Congress  in  Title  III  of  the  Trans- 
portation Act  of  February  28,  1920,  U.  S.  Statutes,  66th  Congress, 
(commonly  known  as  The  Cummins-Esch  Law). 

Proper  regional  panels  of  employers  and  employees  in  different 
classes  of  public  utilities  shall  be  created. 

The  Regional  Adjustment  Conference  shall  consist  of  the  chair- 
man, four  representatives  of  the  parties  to  the  dispute,  two  from  each 
side,  one  employer  representative  and  one  employee  representative 
taken  from  the  panels  in  the  class  of  public  utility  in  which  the  dispute 
arises,  and  two  members  representing  the  government  authority  which 
has  power  to  regulate  the  service  of  the  public  utility.  The  panel 
representatives  may  be  chosen  by  the  parties  to  the  dispute,  from  the 
first  six  names  on  their  respective  panels. 

In  case  of  failure  of  the  chairman  to  secure  the  creation  of  a 
Regional  Adjustment  Conference,  he  shall  proceed,  as  in  the  case  of 
general  industry,  to  form  a  Regional  Board  of  Inquiry.  The  Board 
of  Inquiry  shall  be  constituted  of  the  same  memberships  as  provided 
above  for  the  Regional  Adjustment  Conference,  including  the  repre- 
sentative of  the  party  to  the  dispute,  who  shall  undertake  to  abide  by 
all  the  processes  and  decisions  as  set  forth  below.  Such  party  shall 
have  the  right  to  select  his  panel  member.     In  the  case  of  the  party 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  25 

who  shall  not  appoint  his  representatives  as  above,  the  panel  member 
for  his  side  shall  be  taken  from  the  top  of  the  appropriate  panel. 

The  representatives  of  the  government  authority  on  the  Regional 
Adjustment  Conference,  or  on  the  Regional  Board  of  Inquiry,  shall  be 
appointed  by  the  government  authority  or  commission  authorized  to 
regulate  the  service  of  the  utility  in  which  the  dispute  arises,  and  if 
there  be  no  such  commission,  then  the  Chief  Executive  of  the  govern- 
ment having  the  right  to  regulate  such  service. 

The  National  Industrial  Board  shall,  in  the  case  of  appeals  in  public 
utilities,  reach  its  decisions  by  a  majority  vote,  provided  that  at  least 
one  public  representative  concurs,  and  such  decision  shall  be  binding 
upon  the  employer,  unless  within  ten  days  after  such  an  award  is 
rendered,  he  shall  in  writing  disaffirm  the  same ;  and  likewise,  the 
award  shall  be  binding  upon  the  employees,  unless  within  twenty  days 
after  such  an  award  is  rendered,  it  shall  in  writing  be  disaffirmed  by 
the  employees  acting  by  secret  ballot  under  the  supervision  of  some 
impartial  person  named  in  the  award,  to  conduct  such  a  ballot. 

As  in  general  industry,  the  submission  of  the  parties  to  the  proc- 
esses of  adjustment  shall  be  purely  voluntary.  But  the  selection  of 
their  representatives  to  the  Regional  Adjustment  Conference,  (or  by 
one  of  them,  if  he  join  the  Regional  Board  of  Inquiry)  shall  constitute 
a  complete  agreement  by  the  party  or  parties  who  submit,  that  they 
will  take  no  action  to  impair,  impede,  interfere  with,  or  in  any  way 
interrupt  the  service  of  such  utility,  during  the  adjustment,  (including 
the  period  during  which  the  decision  of  the  National  Industrial  Board 
may  be  disaffirmed,  as  set  forth  above). 

Furthermore,  the  submission  shall  constitute  an  undertaking  that 
when  unanimous  agreement  is  reached  by  a  Regional  Adjustment  Con- 
ference, or  by  decision  of  an  umpire  voluntarily  selected  by  the  par- 
ties, or  when  the  award  of  the  National  Industrial  Board  is  not  dis- 
aflfirmed  by  either  party,  as  above  provided,  such  agreement  or  award 
shall  constitute  a  trade  agreement  by  which  the  employer  agrees  to 
provide  such  work  as  may  be  necessary  for  the  operation  of  the  utility 
under  the  terms  of  the  agreement;  during  the  term  of  the  award,  and 
the  employees  acting  as  a  group  agree  that  they  will  perform  the  work 
necessary  for  the  operation  of  the  utility  in  good  faith  so  far  as  pos- 
sible, under  the  terms  of  the  agreement,  uninterrupted  by  any  group 
action  or  by  any  collective  or  group  understanding,  written  or  oral, 
express  or  implied,  during  the  terms  of  the  award. 

These  provisions  shall  not  prevent  an  employer  from  discharging 
for  cause  in  the  regular  course  of  employment,  nor  prevent  any  indi- 
vidual employee  from  resigning  from  the  service. 

Note. — The  Conference  wishes  to  point  out  that  the  continuity  of 


26  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

employment  in  public  utilities  offers  an  opportunity  for  collective  bar- 
gaining beyond  that  which  has  to  do  with  standards  only,  the  usual 
form  in  general  industry.  The  kind  of  collective  bargaining  here  de- 
scribed, and  which  is  practicable  in  the  case  of  public  utilities,  is  a 
mutually  advantageous  extension  of  the  collective  bargaining  prin- 
ciple into  the  region  of  a  positive  agreement  to  give  and  to  undertake 
actual  employment. 

Since  the  Conference  issued  its  preliminary  statement  on  December 
19,  1919,  the  Congress  has  dealt  with  the  railway  situation  by  the 
Transportation  Act,  1920,  and  a  Special  Commission  also  has  been 
created  with  respect  to  bituminous  coal  mining.  A  majority  of  the 
Conference  therefore  has  deemed  it  unnecessary  to  suggest  any  pro- 
visions for  the  legal  prevention  of  strikes  in  public  utilities  in  this  plan, 
believing  that  the  continuous  operation  of  such  utilities  will  be  secured 
through  the  acquiescence  of  employees  in  the  workings  of  the 
machinery  created  by  the  plan,  especially  when  voluntarily  invoked  or 
accepted  by  them. 

Mr.  Gregory,  however,  feels  that  the  continuous  operation  of  rail- 
roads and  other  transportation  systems,  of  water,  light,  gas,  telegraph 
and  telephone  plants  and  of  groups  of  coal  mines,  all  essential  to  the 
convenience  and  frequently  the  very  existence  of  the  general  public, 
should  be  assured.  He  considers  that  the  Conference  has  provided  fair 
and  adequate  machinery  for  the  prompt  adjustment  of  disputes  between 
employer  and  employee. 

He  was  willing  to  accept  a  plan  which  would  have  made  lock-outs 
and  strikes  in  these  essential  industries  unlawful  during  the  time  the 
proposed  tribunals  were  seeking  to  determine  and  publish  the  facts 
and  settle  the  issues  involved,  and  during  the  subsequent  brief  period 
within  which  the  parties  to  the  controversy  were  to  accept  or  reject  the 
award  made,  and  during  the  period  covered  by  the  award  in  case  both 
parties  accepted  it. 

He  considers  that  the  plan  adopted  furnishes  no  real  guarantee  that 
cither  of  the  contesting  forces,  even  after  having  voluntarily  submitted 
its  contentions  to  the  tribunals,  and  even  while  representatives  of  its 
own  unrestricted  choosing  are  sitting  as  judges  and  participating  in 
an  effort  to  settle  the  dispute  by  a  decision  which  must  be  unanimous 
in  order  to  be  binding,  shall  not  repudiate  these  tribunals  and  thereby 
precipitate  the  very  situation  which  (he  ])roposed  machinery  is  intended 
to  prevent. 

He  feels  that  the  furnishing  of  such  a  guarantee  was  implied  in  the 
following  language  of  the  preliminary  statement  of  the  Conference: 

"The  continuous  operation  of  public  utilities  is  vital  to  ])ublic  wel- 
fare.   As  the  capital  invested  is  employed  in  public  use,  so  is  the  labor 


INDUSTRIAL    CONFERENCE    CALLED    UV    THE    PRESIDENT.  27 

engaged  in  public  service ;  and  the  withdrawal  of  either  with  the  result 
of  suspending  service  makes  the  people  the  real  victim.  While  con- 
tinuous operation  of  all  utilities  is  conducive  to  the  general  C(jn- 
venience  of  the  people,  that  of  some  of  them  is  essential  to  their  very 
existence.  Of  the  latter  class  the  railways  are  a  conspicuous  example 
and  bear  the  same  relation  to  the  body  politic  as  do  the  arteries  to  the 
human  body.  Suspension  produces  practical  social  and  economic 
anarchy  and  may  impose  hardship  even  to  the  point  of  starvation  upon 
large  sections  of  the  community.  The  interruption  in  such  essential 
public  utilities  is  intolerable." 

Mr.  Stuart  shares  the  views  of  Mr.  Gregory,  except  as  to  their 
applicability  to  coal  mines,  which  are  not  public  utilities. 


PUBLIC  EMPLOYEES. 

The  plan  for  general  industry  shall  be  applicable  to  public  em- 
ployees to  the  extent  and  with  the  substantial  modifications  following. 
The  Secretary  of  Commerce  and  the  Secretary  of  Labor  acting  together 
shall  provide  regional  panels  of  persons  who  are  broadly  familiar 
with  the  different  classes  of  services  performed  by  public  employees 
in  the  region.  If  any  state  desires  to  avail  itself  of  this  machinery,  the 
Governor  of  the  state  shall  name  such  panels  for  us^e  in  connection 
with  any  question  affecting  the  public  employees  of  that  state. 

The  Regional  Adjustment  Conference  shall  consist  of  two  repre- 
sentatives from  the  legislative  branch  of  the  Government  authorized  by 
law  to  make  appropriations,  tv^o  representatives  from  that  branch  or 
department  of  the  Government  which  is  in  the  position  of  employer, 
two  representatives  from  the  employees  in  the  class  of  public  service  in 
which  the  question  arises,  and  two  members  to  be  selected  by  the  repre- 
sentatives of  the  employees  from  the  first  twelve  names  on  the  general 
panel. 

A  Regional  Adjustment  Conference  shall  be  convened  by  the  chair- 
man on  the  request  of  the  administrative  head  of  any  department  of  the 
Government  standing  in  the  relation  of  employer,  or  on  the  request  of 
such  a  substantial  number  of  the  employees  as  to  satisfy  the  chairman 
that  the  question  is  of  sufificient  importance  to  justify  the  convening  of 
a  Regional  Adjustment  Conference. 

If  the  Regional  Adjustment  Conference  reaches  an  agreement,  its 
report  shall  take  the  form  of  a  recommendation  to  the  appropriate 
legislative  body,  as  a  basis  for  appropriations.  If  the  Conference  does 
not  reach  an  agreement,  no  report  shall  be  made,  unless  the  legislative 
body  shall  request  such  report. 


28  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

The  appropriate  governmental  authority  shall,  from  time  to  time, 
designate  the  classes  of  public  employees  which  are  to  be  subject  to  the 
plan. 

In  the  case  of  public  employees  there  shall  be  no  Board  of  Inquiry, 
but  all  material  facts  and  information  shall  be  made  available  to  the 
Regional  Adjustment  Conference.  There  shall  be  no  appeal  to  the 
National  Industrial  Board,  and  no  reference  to  an  umpire. 


INDUSTRIAL  CONFERENCE   CALLED  BY   THE  PRESIDENT.  29 

IV.    OTHER  PROBLEMS    AFFECTING    THE  EMPLOYMENT 

RELATIONSHIP 

1.     THE  DEVELOPMENT  OF  INDUSTRIAL  RELATIONS. 

While  the  relations  hetvveen  employers  and  employees  are  primarily 
a  human  problem,  the  relationship  in  its  legal  aspects  is  one  of  con- 
tract. In  the  development  and  establishment  of  this  right  of  contract 
on  the  part  of  workmen,  is  written  the  history  of  labor. 

In  the  early  days  of  civilization  work  was  performed  largely  by 
slaves.  No  employment  contract  then  generally  obtained,  because  the 
employer  was  the  owner,  not  only  of  the  land  and  the  implements  of 
production,  but  of  the  workmen  themselves.  It  is  significant,  however, 
that  as  early  in  history  as  500  B.  C.  engineering  works  were  con- 
structed, at  least  partially,  by  free  workmen  employed  under  contract. 
As  human  beings  gradually  emerged  from  slavery,  the  rights  of  the 
employed  were  slowly  extended.  But  for  many  centuries  the  limita- 
tions on  these  rights  were  so  substantial  as  narrowly  to  limit  the  degree 
of  freedom. 

Though  serfdom  became  the  prevailing  condition  for  the  employed 
during  the  middle  ages,  custom  and  economic  requirements  produced 
checks  on  the  sway  of  the  masters  which  proved  to  some  extent  effec- 
tual, even  when  legal  protection  was  insufficient.  With  the  coming  of 
an  industrial  and  commercial  age,  serfs  were  gradually  emancipated 
and  the  institution  of  serfdom  melted  away.  Through  this  long  process 
the  worker  slowly  advanced  from  one  kind  of  servitude  to  another 
less  galling,  and  his  right  to  contract  for  employment  became  gradually 
less  subject  to  restraint.  It  was  not,  however,  until  within  the  memory 
of  men  still  living  that  it  ceased  to  be  a  penal  offense,  under  the  laws 
of  England,  and  in  some  of  our  states,  for  two  or  more  workmen  to 
combine  to  quit  work,  in  order  to  secure  increased  wages  or  improved 
working  conditions. 

Modern  large  scale  production  and  the  introduction  of  the  great 
corporation  have  brought  also  the  organization  of  labor  into  strong 
associations,  which  may  contract  with  employers  for  employees  as  a 
group.  The  process  of  development  goes  on  and  employers  and  em- 
ployees slowly  advance  toward  the  larger  liberties  and  the  more  serious 
responsibilities  which  follow. 

It  may  aid  in  comprehending  the  work  of  the  Conference  to  recall 
that  the  present  condition  of  freedom  has  come  about  not  so  much 
from  positive  laws  as  from  the  removal  of  restrictions  which  the  laws 


30  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

impose  upon  the  rights  and  the  freedom  of  men.  The  Conference  con- 
fesses that  in  the  prosecution  of  its  work  it  has  been  animated  by  a 
profound  conviction  that  this  freedom  that  has  been  wrought  out  after 
many  centuries  of  struggle  should  be  preserved. 


2.     COLLECTIVE  BARGAINING. 

Two  of  the  most  highly  controversial  questions  which  have  come 
before  the  Conference  are  collective  bargaining  and  the  obligation  to 
carry  out  the  collective  bargain  when  made. 

The  term  "collective  bargaining,"  as  herein  used,  means  negotiation 
between  an  employer  or  an  association  of  employers  on  the  one  side  and 
the  employees  acting  as  a  group,  on  the  other.  There  are  two  types  of 
collective  bargaining  as  thus  defined;  one  in  which  the  employees  act  as 
a  group  through  the  trade  or  labor  union ;  the  other  in  which  they  act 
as  a  group  through  some  other  plan  of  employee  representation. 

An  analysis  of  the  heated  controversies  that  are  current  with  ref- 
erence to  collective  bargaining  indicates  that  the  employees  place  the 
emphasis  on  the  right  of  wage-earners  to  bargain  collectively,  and  that 
tlie  employers  place  the  emphasis  on  the  riglit  of  employers  to  bargain 
or  refuse  to  bargain  collectively  at  their  discretion. 

The  Conference  believes  that  the  matter  is  not  advanced  materially 
by  the  assertion  of  the  right,  on  the  one  side,  to  bargain  collectively,  or 
on  the  other  side,  of  the  right  to  refuse  to  bargain  collectively;  as  ab- 
stract rights  both  undoubtedly  exist.  The  real  question,  however,  is 
whether,  as  a  matter  of  policy,  better  relationships  between  employers 
and  employees  will  be  promoted,  and  a  more  effective  industrial  organ- 
ization for  the  nation  will  be  brought  about,  if  a  system  of  collective 
bargaining  is  adopted. 

On  the  question  of  policy,  the  princii)al  difference  relates  to  the  ma- 
chinery through  which  the  collective  l)argaining  is  carried  out.  While 
there  are  some  employers  who  still  insist  upon  the  policy  of  dealing  with 
their  employees  individually,  and  not  as  a  group,  we  think  their  number 
is  diminishing.  Many  employers,  however,  object  to  collective  bargain- 
ing through  the  trade  union,  on  the  ground  that  its  agents  are  often  not 
truly  representative  of  their  employees,  that  they  are  often  uninformed 
in  regard  to  the  technical  details  of  the  business  involved,  and  that, 
instead  of  feeling  concern  for  the  success  of  this  business  upon  which 
the  welfare  of  the  employees  as  well  as  of  the  employers  vitally  de- 
pends, they  care  primarily  for  the  success  of  the  unions  which  they 
represent. 

On  the  other  hand,  cinployers  often  object  to  collective  bargaining 


r§ 


rpff^'''%'. 


INDUSTRIAL     CONFERENCE    CALLED     BY    THE     PRESIDENT.  31 

through  employee  representatives,  on  the  ground  that  such  spokesmen, 
because  themselves  employees,  are  too  dependent  upon  the  employer, 
and  too  much  under  his  influence  to  be  good  negotiators. 

The  Conference  is  in  favor  of  the  policy  of  collective  bargaining. 
It  sees  in  a  frank  acceptance  of  this  principle  the  most  helpful  approach 
to  industrial  peace.  It  believes  that  the  great  body  of  the  employers  of 
the  country  accept  this  principle.  The  difference  of  opinion  appears 
in  regard  to  the  method  of  representation.  In  the  plan  proposed  by 
the  Conference  for  the  adjustment  of  disputes,  provision  is  made  for 
the  unrestricted  selection  of  representatives  by  employees,  and  at  the 
same  time  provision  is  also  made  to  insure  that  the  representatives  of 
employees  in  fact  represent  the  majority  of  the  employees,  in  order  that 
they  may  be  able  to  bind  them  in  good  faith.  The  Conference  believes 
that  the  dififlculties  can  be  overcome  and  the  advantages  of  collective 
bargaining  secured  if  employers  and  employees  will  honestly  attempt 
to  substitute  for  an  unyielding,  contentious  attitude,  a  spirit  of  co- 
operation with  reference  to  those  aspects  of  the  employment  relation 
where  their  interests  are  not  really  opposed  but  mutual. 

•  Essential  to  the  success  of  collective  bargaining  is  a  clear  realiza- 
tion by  both  sides,  of  the  obligations  which  it  imposes,  and  of  the  limita- 
tions of  these  obligations.  The  collective  bargain  usually  relates 
to  standards  only,  such  as  the  rate  of  wages  to  be  paid,  the  hours  to 
constitute  a  day's  work,  and  the  conditions  under  which  the  work  is 
to  be  performed.  There  is  also  usually  a  specified  time  during  which 
the  agreed  standards  are  to  be  maintained.  The  agreement  imposes  on 
the  employer  the  obligation  to  observe  these  standards  if  he  provides 
work.  It  does  not  bind  him  to  provide  work.  Similarly,  it  imposes  on 
employees  the  obligation  to  accept  the  agreed  standards  so  long  as  they 
remain  at  work.     It  does  not  bind  them  to  continue  in  employment. 

Under  a  collective  bargain  establishing  standards,  an  employer  act- 
ing in  good  faith  may  close  down  his  plant,  in  whole  or  in  part,  without 
breach  of  his  obligation.  On  their  side  the  employees  may  resign 
their  positions  without  breach  of  their  obligation.  In  such  case  the 
employer,  however,  is  free  to  fill  without  interference  the  positions  so 
voluntarily  vacated. 

The  obligation  involved  in  a  collective  agreement  on  standards  is 
sometimes  thought  of  as  a  binding  agreement  by  which  the  employees 
are  obliged  to  continue  in  employment,  although  the  right  of  the  em- 
ployer to  shut  down  his  plant  has  rarely  been  questioned.  This  is  a  one- 
sided   interpretation    of    the    agreement    which    would    give    the    em- 


32  INDUSTRIAL     CONFERENCE    CALLED     BY    THE    PRESIDENT. 

ployer,  without  any  reciprocal  obligation,  a  virtual  call  on  the 
services  of  his  employees.     Such  an  interpretation  is  obviously  unfair. 

The  above  statements  do  not  mean  that  during  the  period  of  the 
agreement  the  employer  may  "lockout"  or  the  employees  may  "strike," 
the  purpose  being  to  change  the  standards  by  means  of  economic  pres- 
sure. A  "strike"  is  not  merely  a  withdrawal  from  employment ;  it  is 
an  effort  to  secure  better  terms  for  the  positions  held.  Similarly,  a 
"lockout"  is  something  more  than  a  temporary  discontinuance  of  pro- 
duction ;  it  is  an  attempt  to  force  employees  to  accept  lower  standards. 
Both  involve  breach  of  a  collective  bargain  on  standards  and  are 
unjustifiable. 

The  Conference  has  given  a  great  deal  of  consideration  to  the  whole 
question  of  enforcement  of  collective  bargains  once  entered  upon.  As 
shown  above,  bargains  of  this  character  do  not  lend  themselves  readily 
to  legal  enforcement.  The  social  and  legal  forces  that  surround  the 
problem  are  of  the  most  complex  order  and  must  be  a  matter  of 
development  in  the  community.  The  Conference  believes  that  for  the 
present  at  least,  enforcement  must  rest  substantially  upon  good  faith. 
It  is  obvious  that  the  essence  of  success  in  collective  bargaining  lies 
in  the  fidelity  of  both  sides  to  agreements. 


3.     HOURS  OF  LABOR. 

Hours  of  labor,  wages  and  women  and  children  in  industry, 
should  be  approached  from  the  aspect  both  of  the  health  and  wel- 
fare of  the  workers,  and  of  the  efficient  use  of  the  country's  resources 
in  man-power  over  a  prolonged  period  of  time.  The  nation  is  not 
interested  primarily  in  what  one  or  another  body  of  its  citizens  may 
believe  to  be  for  their  immediate  j^crsonal  advantage ;  it  is  interested 
fundamentally  in  the  progressive  development  of  the  physical,  mental 
and  spiritual  well-being  of  its  citizens.  The  question  as  to  what  con- 
stitutes this  well-being  under  the  complicated  conditions  of  modern 
industrial  life  cannot  be  easily  determined  off-hand,  but  must  be  based 
upon  a  body  of  fact,  accurately  ascertained  from  experience. 

The  problem  of  hours  has  undergone  a  fundamental  change  through 
the  introducticjn  of  large  scale  factory  production  and  the  growing 
concentration  of  our  population  in  cities.  Men  and  women  can  work 
relatively  long  hours  at  work  which  is  interesting,  which  calls  upon 
their  various  energies,  which  gives  some  opportunity  for  creative  self- 
expression.  Work  which  is  repetitive,  monotonous  and  conducted 
under  the  confining  indoor  conditions  of  even  the  best  industrial  plant, 
especially  where  the  plant  is  located  at  a  distance  from  the  homes  of 


INDUSTRIAL     CONFERENCE    CALLED    BY     THE    PRESIDENT.  33 

the  workers,  makes  much  more  exacting  physical  and  nervous  demands. 
If  the  inevitable  conditions  of  modern  industry  do  not  ofifer  variety 
and  continuing  interest,  the  worker  should  have  hours  short  enough 
for  more  recreation,  and  for  greater  contact  with  his  fellowmen  outside 
of  working  hours. 

Studies  should  be  made  in  each  industry,  (preferably  by  the 
industry,  but  in  its  default,  by  the  appropriate  government  agency) 
of  the  problem  of  industrial  fatigue  in  relation  to  production,  to 
determine  on  the  basis  of  experience;  first,  what  schedule  of  hours  is 
consistent  with  the  health  and  well-being  of  the  workers ;  and,  second, 
the  hour  schedule  within  the  above  limitations,  which  will  afford  the 
maximum  productivity  in  the  industry.  It  should  be  recognized  by 
employees  and  employers,  and  primarily  by  the  public,  that  hours 
schedules  which  are  below  the  standard  of  maximum  productivity  must 
necessarily  reduce  the  total  industrial  product,  and  consequently  reduce 
the  standard  of  living,  or  increase  prices.  Such  reduction  in  all  industry 
will  necessarily  reduce  the  total  industrial  product  of  the  nation  and  the 
standard  of  living  will  be  reduced  by  that  much  below  the  attainable 
maximum.  This  fact  should  be  taken  into  account  in  connection  with 
the  advantages,  in  other  directions,  to  the  worker  which  may  accrue 
from  such  a  shortening  of  hours. 

Studies  which  have  already  been  made  in  some  industries  indicate 
that  long  hours  do  not  in  general  result  in  maximum  production.  The 
Conference  believes  that  some  industries  are  now  operating,  in  part 
at  least,  on  hours  schedules  which  are  above  the  standard  of  maximum 
productivity,  and  which  in  any  case  do  not  allow  employees  proper 
opportunity  for  rest  and  recration.  There  are  large  basic  industries 
which  still  employ  substantial  numbers  of  their  men  in  exhausting  work 
for  eighty-four  hours  per  week  and  longer.  Such  conditions  are  op- 
posed to  public  interest,  are  contrary  to  every  instinct  of  human  de- 
velopment, and  are  a  pregnant  cause  for  industrial  and  political  unrest. 

It  is  perhaps  unnecessary  to  point  out  that  the  conditions  of  various 
industries  make  any  universal  standardization  of  hours  unnecessary 
and  unwise.  For  example,  the  seasonal  and  intermittent  nature  of  agri- 
cultural work  and  the  fact  that  it  is  carried  on  under  out-of-door  condi- 
tions which  are  not  essentially  detrimental  to  the  well-being  of  the 
worker,  would  naturally  exclude  agriculture  from  the  class  of  indus- 
tries in  which  the  work  is  confining  and  repetitive. 

The  Conference  believes  that  experience  has  demonstrated  that  in 
fixing  hours  of  labor  in  industrial  establishments  at  a  point  con- 
sistent with  the  health  of  the  employees,  and  with  proper  opportunity 
for  rest  and  recreation,  there  should  in  all  cases  be  provision  for  one 
day's  rest  in  seven. 


34  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

The  Conference  believes  that  in  most  factories,  mines  and  work- 
shops, and  especially  in  repetitive  work,  the  present  trend  of  practice 
favors  a  schedule  of  hours  of  not  more  than  forty-eight  hours  per  week. 

The  Conference  does  not  think  that  a  schedule  of  hours  substan- 
tially less  than  the  forty-eight  hour  standard  now  in  operation  is  at  this 
time  desirable,  except  in  industries  where  a  scientific  study  of  the  prob- 
lem on  the  basis  already  outlined,  indicates  that  such  reduction  is 
necessary  for  the  protection  of  the  health  and  safety  of  the  workers 
and  is  in  the  public  interest. 

The  practice  in  some  industries,  of  arranging  by  mutual  agreement 
of  employer  and  employees  for  a  Saturday  half  holiday,  without  reduc- 
tion of  the  weekly  schedule  of  hours,  has  great  advantages.  Hours 
of  labor  schedules  should  be  arranged  on  a  weekly  basis,  and 
overtime  should  not  be  permitted  except  in  case  of  temporary  emer- 
gency. 

It  should  moreover  be  borne  in  mind  that  further  reduction  of 
hours  below  this  standard  in  any  industry  will  throw  an  extra  burden 
upon  other  industries,  and  may  especially  prejudice  agricultural  com- 
munities who  already  feel  the  growing  competition  of  the  cities  in  draw- 
ing away  workers  from  the  farm. 


4.     WOMEN  IN  INDUSTRY. 

Women  cannot  enter  industry  without  safeguards  additional  to  those 
provided  for  men,  if  they  are  to  be  equally  protected.  The  danger  of 
exploiting  their  physical  and  nervous  strength  with  cumulative  ill  effects 
upon  the  next  generation,  is  more  serious  and  the  results  are  more 
harmful  to  the  community.  Special  provision  is  needed  to  keep  their 
hours  within  reason,  to  prohibit  night  employment  in  factories  and 
workshops,  and  to  exclude  them  from  those  trades  offering  particular 
dangers  to  women. 

Where  women  can  and  do  perform  work  of  equal  quality  and 
r|uantity  as  compared  with  that  of  men  under  similar  conditions,  they 
should  receive  equal  pay.  They  should  not  be  discriminated  against 
in  respect  to  opportunities  for  training  and  advancement,  or  the  repre- 
sentation of  their  interests. 


5.     CHILD  LABOR. 

The  I'edcral  f  iovcrnnient  has  already  recognized  ilic  unsoundness 
in  the  economic  u>('  of  the  nation's  resources  of  permitting  the  entrance 
of  young  children  into  industry.    Such  a  practice  results  in  the  progres- 


INDUSTRIAL     CONFKRENCI-:    CALLKD     1!V     THE     I'RKSIUKNT.  35 

sive  degeneration  6i  the  race  and  tends  to  impair  the  human  resources 
of  the  country  on  which  the  coming  generation  must  rely.  The  mat- 
ter cannot  wisely  be  left  to  the  sole  initiative  of  the  separate  states. 
Such  a  course  is  not  only  unfair  to  the  states  which  have  attempted 
to  deal  with  the  problem.  It  places  a  premium  upon  states  which  are 
willing  to  subordinate  the  future  well-being  of  their  citizens  to  a  pres- 
ent questionable  competitive  advantage  in  industry. 

In  considering  child  labor,  as  well  as  in  other  aspects  of  the  in- 
dustrial problem,  a  differentiation  should  be  made  between  the  various 
employments  which  children  enter.  The  entrance  of  children  of  tender 
years  into  a  mill  or  factory  tends  to  stunt  their  development,  and  injure 
the  race.  The  argument  that  the  child  is  thus  enabled  to  learn  a  trade  is 
unsound.  For  the  trade  may  be  more  quickly  learned,  with  greater  op- 
portunity for  subsequent  progress,  by  a  boy  of  sixteen  who  has  spent 
ten  years  in  elementary  schooling,  than  by  a  boy  who  loses  the  oppor- 
tunity for  intellectual  and  sound  physical  development  by  entering 
the  mill  at  ten  or  twelve.  On  the  other  hand,  the  employment  of 
children  in  agriculture  may,  if  wisely  supervised,  develop  physique 
and  lay  a  good  foundation  for  their  more  formal  education  in  the 
country  school. 

But  sheer  prohibition  of  child  labor  is,  at  best,  only  a  negative 
attack  upon  the  problem.  It  is  not  thoroughly  effective  in  promoting 
the  economic  welfare  of  the  nation  unless  the  time  now  spent  by  the 
child  in  industry  is  devoted  to  adequate  schooling  and  to  activity 
which  will  develop  his  physical  well-being.  We  must  not  only  pro- 
tect our  children  from  the  physical  degeneration  which  results  from 
an  early  entrance  into  the  mill  or  factory,  we  must  enable  them  by 
education  to  take  their  place  in  society. 

It  is  a  startling  fact  that  of  the  5,516,163  illiterate  persons  of  over 
ten  years  of  age  in  the  United  States  at  the  last  census,  over  68  per 
cent,  were  native  born.  There  were  approximately  as  many  native 
born  white  illiterates  as  there  were  foreign  born.  The  problem  is  not 
therefore  solely  or  primarily  due  to  the  large  influx  of  foreign  men 
and  women  from  the  less  literate  countries  of  Europe.  It  is  primarily 
a  condition  of  illiteracy  among  our  own  people,  and  the  lowest  per- 
centage of  illiteracy,  (1.1  per  cent.)  was  among  the  native  born  children 
of  foreign  or  mixed  parentage. 

Not  only  are  the  prohibition  of  child  labor  and  provision  for 
compulsory  elementary  education  complementary;  the  age  limits  for 
those  two  classes  of  legislation  should  be,  as  far  as  possible,  the  same. 

Up  to  the  present,  the  Federal  Government  has  not  been  able  to 
deal  comprehensively  with  the  subject  of  child  labor.  The  present 
federal  child  labor  tax  law  imposes  a  tax  of   10  per  cent,  upon  the 


36  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

net  profits  of  any  mine  or  quarry  which  employs  children  under  six- 
teen years  of  age,  and  of  any  manufacturing  establishment  which  em- 
ploys children  under  fourteen.  It  makes  no  provision  which  assures 
the  non-employment  of  children  in  street  trades  and  various  blind 
alley  occupations  during  the  time  they  should  be  at  school. 

The  fact  that  the  former  federal  child  labor  law  has  been  de- 
clared unconstitutional  should  not  be  interpreted  as  registering  or  en- 
couraging popular  sentiment  against  such  legislation  but  rather  as 
occasion  for  arousing  public  sentiment  in  the  interests  of  the  rights 
of  childhood. 

The  intimate  relation  between  these  rights  and  both  compulsory 
education  and  child  labor  legislation  suggests  that  the  ideal  solution 
of  the  problem  would  be  a  reasonable  uniformity  by  all  the  states  in 
their  legislation  upon  these  topics.  The  Conference,  believing  that 
the  education  and  welfare  of  the  childhood  of  the  country  is  not  en- 
tirely a  local  interest,  urges  upon  all  states  not  having  adequate  legis- 
lation upon  child  labor  and  compulsory  education  that  they  give  these 
topics  prompt  and  sympathetic  consideration.  Already  in  forty  states 
compulsory  education  up  to  the  age  of  sixteen,  with  certain  exceptions, 
has  been  provided  for.  This  has  opened  the  way  for  consistent  leg- 
islation upon  the  question  of  child  labor.  Under  legislation  of  this 
character  experience  is  rapidly  demonstrating  that  the  economic,  as 
well  as  other  vital  interests  of  the  country,  are  best  conserved  by 
lengthening  the  period  of  education.  This  makes  possible  a  normal 
physical,  intellectual  and  social  development  of  the  youth  of  the 
country. 

6.     HOUSING. 

It  is  unnecessary  to  point  out  the  intimate  relation  which  exists 
between  efficient  production  and  the  conditions  of  life  to  which  a  man 
or  woman  returns  at  the  close  of  a  day's  work.  When  the  employees 
of  industry  and  commerce  return  to  families  who  arc  housed  in  dwell- 
ings that  are  crowded,  unsanitary,  inconvenient,  and  unlovely,  these 
men  and  women  suffer  in  health  and  well-being,  and  consequently  are 
unable  to  render  that  effective  productive  clTort  which  the  nation  needs. 
The  menace  of  these  conditions  cannot  be  overlooked.  Bad  housing 
creates  a  destructive  restlessness  that  swells  the  volume  of  industrial 
discontent.  The  relation  of  these  factors  is  direct,  the  consequences 
obvious. 

It  must  be  Ijornc  in  mind  that  during  ihc  years  of  the  war,  there  was 
serious  retardation  of  building  operations  outside  of  the  immediate  war 
time  needs  of  the  country.    The  cessation  of  hostilities  was  followed 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  37 

by  a  period  of  industrial  readjustment  which  is  resulting  in  a  more 
rapid  extension  of  the  country's  plant  and  factory  facilities  than  has 
occurred  iot  many  years.  No  proportionate  extension  of  housing 
facilities  is  accompanying  this  rearrangement.  The  present  condition 
of  insufficient  housing  will  therefore  be  seriously  aggravated  rather 
than  improved. 

Provision  for  adequate  housing  is  a  responsibility  which  must  rest 
primarily  upon  the  local  community.  Concerted  action  in  all  industrial 
communities  is  necessary  to  deal  with  the  problem.  The  community, 
its  employees,  its  employers,  its  banks,  its  citizens  generally  should 
promptly  take  stock  of  their  present  position  and  develop  such  a  pro- 
gram as  is  called  for  by  their  local  requirements.  Measures  should  be 
developed  to  enable  employees  in  permanently  located  industries  to 
acquire,  on  proper  terms  the  ownership  of  their  own  homes,  with  pro- 
tection against  the  dangers  of  real  estate  speculation  and  exploita- 
tion. The  states  should  likewise  initiate  systematic  inquiries  into  the 
subject,  including  the  extension  of  proper  building  and  housing  codes, 
already  successfully  applied  in  many  localities.  The  studies  of  the 
Federal  Government  in  this  field  should  be  continued  and  emphasized. 


7.     WAGES. 

Considered  from  the  standpoint  of  public  interest,  it  is  funda- 
mental that  the  basic  wages  of  all  employees  should  be  adequate 
to  maintain  the  employee  and  his  family  in  reasonable  comfort,  and 
with  adequate  opportunity  for  the  education  of  his  children.  When 
the  wages  of  any  group  fall  below  this  standard  for  any  length  of 
time,  the  situation  becomes  dangerous  to  the  well-being  of  the  state. 
No  country  that  seeks  to  protect  its  citizens  from  the  unnecessary 
ravages  of  disease,  degeneration  and  dangerous  discontent,  can  con- 
sistently let  the  unhampered  play  of  opposing  forces  result  in  the  sup- 
pression of  wages  below  a  decent  subsistence  level.  Above  that  point, 
there  may  well  be  a  fair  field  for  the  play  of  competition  in  determining 
the  compensation  for  special  ability,  for  special  strength  or  special  risk, 
(where  risk  is  unavoidable),  but  below  that  point  the  matter  becomes 
one  of  which  the  state  for  the  sake  of  its  own  preservation,  must  take 
account. 

The  nation  is  interested  in  the  welfare  of  its  citizens  not  only  from 
the  point  of  view  of  wages,  but  from  the  not  unrelated  one  of  produc- 
tivity. If,  therefore,  the  Conference  recommends  the  establishment  of 
hours  and  wages  on  a  basis  of  justice  to  employees,  it  must  also  recom- 
mend that  the  employees  do  their  part  in  seeing  that  the  productivity  of 


188602 


38  INDUSTRIAL     CONFERENCE    CALLED    BY    THE    PRESIDENT. 

the  nation  is  safeguarded.  The  nation  has  a  right  to  ask  that  em- 
ployees impose  no  arbitrary  Hmitation  of  effort  in  the  prosecution 
of  their  work.  Such  limitation  decreases  the  country's  output,  and 
if  practiced  at  all  generally,  is  bound  to  result  in  a  decline  of  the 
standard  of  living.  It  is  gratifying  that  many  leaders  of  organized  labor 
are  in  agreement  as  to  the  unsoundness  of  such  limitation  of  output, 
and  are  opposed  to  its  practice. 

If  it  is  for  the  nation  to  insure  that  wages  shall  not  sink  below  a 
living  level,  and  for  employees  not  to  restrict  production;  it  is 
incumbent  upon  employers  to  see  that  special  effort  and  special  ability 
on  the  part  of  their  employees  receive  a  stimulating  compensation. 
If  increased  output  and  efficiency  are  met  only  by  a  reduction  of  piece 
prices,  the  incentive  to  such  effort  is  taken  away.  Employees  to  do 
their  best  work  must  feel  that  they  are  getting  a  reasonable  share 
of  any  increased  return  that  they  bring  the  industry.  Labor  incentive 
is  a  factor  that  it  is  as  shortsighted  to  ignore  as  incentive  to  capital. 

From  this  standpoint,  the  question  of  methods  of  wage  payment  is 
one  that  deserves  careful  study  on  both  sides.  Industries  which  have 
established  facilities  for  mutual  discussion  of  such  questions,  whether 
through  unions  or  other  forms  of  employee  representation,  are  finding 
that  it  is  possible  at  the  same  time  to  safeguard  the  worker  from  ex- 
ploitation and  to  safeguard  incentive  to  production. 

8.     PROFIT  SHARING  AND  GAIN  SHARING. 

Profit  sharing  is  regarded  in  some  quarters  as  a  complete  solution 
of  industrial  problems.  The  Conference  believes  that  while  it  has 
promise  in  some  directions,  it  cannot  by  itself,  be  considered  to  be  of 
far-reaching  effect.  Profit  sharing  in  its  simplest  form  has  met  with 
success  under  certain  conditions — sometimes  where  an  unusual  per- 
sonality has  contributed  to  a  happy  outcome, — sometimes  where  the 
contribution  of  individual  employees  to  the  profits  of  an  enterprise 
can  be  measured  with  some  accuracy.  It  has  proved  of  beneficial  effect 
when  applied  to  employees  occupying  executive  and  management  posi- 
tions, and  to  sales  organizations.  Its  extension  to  all  the  employees 
of  typical  manufacturing  plants  meets  with  difficulties.  It  is  not  easy 
to  determine  what  part  of  the  profits  or  losses  of  such  plants  are 
attributable  to  tiie  efforts  of  the  rank  and  file  of  the  employees,  or  to 
a])portion  among  them  shares  of  profits  which  shall  be  steadily  in 
accord  with  tlu-  sijirit  and  llie  direct  outcome  of  their  individual 
efforts. 

Xcvcrthck'ss,  the  Conference  thinks  that  the  field  is  one  in  which 
sincere  experiments  may  add  a  real  knowledge  of  desirable  procedure, 


INDUSTRIAL     CONFERENCE    CALLED     MV     THE    PRESIDENT.  39 

and  therefore  that  profit  sharing  experiments  should  be  welcomed, 
particularly  when  carried  out  as  part  of  a  consistent  policy  of  bring- 
ing employer  and  employee  together,  and  promoting  among  employees 
a  sense  of  interest  and  responsibility.  Like  employee  representation 
its  usefulness  depends  on  the  spirit  in  which  it  is  organized  and  ad- 
ministered. A  mechanical  application,  especially  when  accompanied 
with  pretentious  announcements  and  claims,  may  do  more  harm  than 
good.  The  Conference  cannot  see  in  profit  sharing  anything  in  the 
nature  of  a  panacea,  but  it  believes  that,  properly  adapted  to  the  char- 
acter of  the  individual  business,  and  carried  out  in  a  spirit  of  genuine 
mutuality,  it  may  often  better  industrial  relations.  In  order  to  ac- 
complish the  result  aimed  at,  the  allotted  shares  of  profit  obviously 
should  be  supplements  to  fair  wages,  and  in  no  sense  a  substitute  for 
fair  wages,  or  in  lieu  of  deductions  therefrom. 

There  has  been  some  promising  experience  in  the  cognate 
field  of  gain  sharing.  Here  the  employees  in  a  particular  depart- 
ment or  sub-department  share  in  the  gains  in  production  and  in 
reductions  of  cost  which  are  accomplished  by  the  joint  efforts  of  the 
management  and  themselves.  Under  such  plans  the  employees  can 
see  clearly  the  immediate  relation  between  their  own  efforts  and  the 
resulting  return.  There  enter  no  complicating  factors  of  gains  and 
losses  made  in  the  purchasing  and  selling  departments  for  which  the 
productive  shop  employees  are  in  no  way  responsible.  And  here  also 
the  distribution  to  employees  can  be  made  at  such  frequent  intervals 
as  to  bring  into  more  immediate  relation  the  effort  and  the  return. 


9.     THRIFT  AGENCIES. 

Good  industrial  management  on  the  part  of  a  nation  will  analyze 
preventable  human  losses  and  provide  adequate  resources  for 
meeting  them.  Such  losses  in  human  efificiency  could  be  lessened  by 
more  adequate  agencies  to  promote  thrift,  in  connection  with  provision 
against  illness,  old  age,  premature  death  and  industrial  accident. 

There  have  been  many  plans  of  health  insurance  and  old  age 
insurance  elaborated  in  other  parts  of  the  world  and  advocated  in 
the  United  States.  Without  discussing  whether  such  plans,  when 
based  upon  government  subsidy  or  compulsory  action,  are  consonant 
with  American  ideals,  the  Conference  believes  that  an  extension  and 
simplification  of  the  insurance  principle  as  a  means  of  promoting  thrift, 
saving  and  independence,  would  be  advantageous  to  the  people.  The 
alternative  to  such  insurance  against  sickness  and  old  age  lies  in  a 
wage  adequate  to  cover  these  items.     The  Conference  therefore  sug- 


40  INDUSTRIAL     CONFERENCE     CALLED     BY     THE     PRESIDENT. 

gests  that  the  Federal  Government  should  inaugurate  a  careful,  author- 
itative investigation  on  the  whole  subject. 

It  feels  that  such  investigation  could  well  include  such  items  as 
the  possibility  of  converting  the  great  multitude  of  small  Liberty 
Loan  Investments  in  the  country,  (with  all  the  attendant  difficulty  of 
collecting  small  amounts  of  interest)  into  some  form  of  old  age 
annuities.  Such  measures  would  extend  the  investment  of  savings 
in  government  securities,  would  be  more  economical  in  administra- 
tion than  present  direct  bond  investments,  and  would  be  more  stimu- 
lative to  thrift  and  saving.  A  policy  of  this  sort  would  furnish  a 
method  by  which  many  industrial  concerns  and  their  agencies,  which 
are  endeavoring  to  make  provision  out  of  profits  for  old  age  security 
of  their  employees,  could  find  a  safe  and  helpful  avenue  for  such 
investment. 

The  problem  of  health  and  of  old  age  insurance,  and  its  promotion 
by  some  means  consonant  with  national  ideals,  demands  consid- 
eration. If  such  means  can  be  devised,  they  will  furnish  a  relief  to 
the  states  in  the  care  of  the  ill,  the  indigent  and  the  aged. 

The  entire  subject  needs  careful  investigation  and  public  discussion 
which  could,  with  great  advantage,  be  promoted  by  the  Federal  Gov- 
ernment. 

10.     INFLATION  AND  THE  HIGH  COST  OF  LIVING. 

A  prolific  cause  of  unrest  is  the  disturbance  of  economic  equi- 
librium through  the  rapid  increase  in  the  cost  of  living.  Remedy  for 
this  evil  must  be  gradual,  for  sudden  reduction  of  prices  only  comes 
through  financial  and  industrial  crises,  which  result  in  unemployment 
and  sufifering. 

Increase  in  production  during  the  past  five  years  has  not  been  at 
all  commensurate  with  the  expansion  of  currency  and  credits  through 
war  finance.  Inflation  during  tlic  past  year  moreover  has  [jrocceded 
at  an  increased  rate,  in  the  face  of  reduced  production. 

While  the  rise  in  the  price  of  commodities  parallels  the  increase  in 
credit  and  currency  inflation,  and  may  ])y  some  be  regarded  as  an 
effect  and  nf)l  a  cause,  and  due  to  the  shortage  in  world  production, 
yet  the  parallel  between  the  two  sets  of  figures  is  illuminating. 

Inflation  must  be  dealt  wilh  through  the  wise  restriction  of  credits 
i)y  the  banks,  by  increased  production  and  by  saving  and  economy 
in  consumption.  If  these  forces  were  brought  into  play,  speculation 
and  profiteering  would  recede  and  the  cost  of  li\'ing  clccrease.  The 
readjustment  must  be  gradual,  or  it  will  involve  industrial  and  financial 
disturbances  that  will   result  in  widespread  unemployment  and  great 


INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT.  41 

hardship.  If  the  advance  of  inflation  is  stopped,  the  opportunity  for 
speculation  will  be  diminished  and  amelioration  of  the  situation  will 
ensue  without  disturbance. 

Since  changes  in  the  cost  of  living,  and  the  readjustments  they  make 
necessary,  must  continue  to  be  significant,  it  is  vitally  important  that  the 
Government  maintain  and  even  extend  its  machinery  for  investigating 
and  reporting  upon  this  phase  of  the  industrial  situation.  The  need  for 
trustworthy  and  properly  digested  information  in  this  field  is  neces- 
sarily, an  expanding  need.  During  the  war,  the  government  made 
periodic  investigations  of  the  cost  of  living  in  the  industrial  centers  of 
the  country,  as  related  to  family  budgets.  Exact  and  reliable  informa- 
tion is  equally  important  during  the  period  of  reconstruction  through 
which  we  are  now  passing.  In  their  commendable  purpose  of  bringing 
the  activities  and  expenditures  of  government  back  to  a  peace  basis, 
those  responsible  for  controlling  appropriations  are  justified  in  giving 
full  recognition  to  this  fact.  The  Conference  hopes  that  adequate 
appropriations  for  the  continuance  of  eflfective  investigation  work  and 
the  publication  of  results  may  not  be  lacking. 


11.     PUBLIC  EMPLOYEES. 

When  men  and  women  enter  the  public  service  they  become  a  part 
of  the  machinery  of  government,  and  servants  of  the  people.  Con- 
tinuous and  eflfective  service  by  these  employees  is  not  only  essential, 
but  constitutes  the  functioning  of  government.  Even  the  right  of  the 
individual  to  retire  is  limited  by  his  duty  to  give  due  notice,  dependent 
upon  the  character  of  his  service,  so  that  there  may  be  no  cessation  in 
its  performance.  Concerted  retirement  of  any  particular  group  from 
their  post  of  duty  may  result  in  the  paralysis  of  important  public 
functions,  and  is  nothing  less  than  a  blow  at  the  government  itself 
struck  by  those  on  whom  rests  the  obligation  of  helping  to  conduct  it. 

The  government  is  entitled  to  the  best  quality  of  service,  and  to  be 
assured  of  this,  there  should  be  frank  recognition  of  the  right  of  its 
employees  to  just  compensation.  Salaries  or  wages  not  properly  com- 
parable with  those  paid  in  private  employment  naturally  result  in  fail- 
ure to  attract  to  and  retain  in  these  positions  the  best  qualified  em- 
ployees, and  result  also  in  discontent  reflected  in  an  impaired  service. 

The  increased  cost  of  living  since  1914,  has  fallen  heavily  upon 
professional,  clerical  and  administrative  employees.  Some  overdue 
readjustments  have  lately  been  made,  or  are  in  process  of  being  made, 
yet  the  fact  remains  that,  as  the  cost  of  the  necessaries  of  life  has 
mounted,  many  classes  of  salaried  government  servants  have  not  re- 


42  INDUSTRIAL    CONFERENCE    CALLED    BY    THE    PRESIDENT. 

ceived  the  relief  that  has  been  given  in  many  branches  of  private 
employment. 

Among  those  employees  who  suffer  most  acutely  have  been  the 
teachers  in  our  schools.  Their  situation  in  many  parts  of  the  country 
has  become  deplorable.  Thousands  of  them,  trained  in  their  pro- 
fession, with  a  high  and  honorable  pride  in  it,  have  been  literally 
forced  to  leave  it,  and  to  resign  what  had  been  their  hope,  not  of 
wealth,  but  of  loyal  service  in  building  the  foundation  of  knowledge 
and  character  upon  which  our  national  strength  must  rest.  In  conse- 
quence there  is  everywhere  a  shortage  of  teachers.  An  inquiry  made 
by  the  Bureau  of  Education  showed  that  in  January,  1920,  more  than 
18,000  teachers'  positions  in  the  public  schools  of  the  country  were 
then  vacant  because  the  teachers  to  fill  them  could  not  be  had.  Over 
42,000  positions  are  filled,  in  order  that  they  may  be  filled  at  all,  by 
teachers  whose  qualifications  are  below  the  minimum  standard  of 
requirement  in  the  several  states.  It  is  the  estimate  of  the  Commis- 
sioner of  Education  that  more  than  300,000  of  the  650,000  school 
teachers  of  the  country  are  today  "  below  any  reasonable  minimum 
standard  of  qualifications."  .Many  of  those  who  remain  in  our  schools 
receive  less  pay  than  common  laborers,  despite  the  long  years  of 
preparation  for  their  profession  that  they  have  undertaken.  This 
situation  is  a  national  menace.  It  is  useless  to  talk  of  Americanization 
and  of  the  diminution  of  illiteracy  and  other  national  educational  prob- 
lems, unless  it  is  faced  at  once. 

The  conduct  of  the  great  body  of  these  public  employees,  under 
conditions  which  have  brought  acute  hardship  in  many  instances,  has 
demonstrated  their  loyalty  to  the  sound  principle  that  there  should  be 
no  interference  with  the  continuous  functions  of  the  government. 

Since  the  principle  involved  requires  the  surrender  of  resort  to  the 
strike,  the  obligation  of  providing  means  whereby  their  interests  may  be 
safeguarded  and  their  grievances  given  prompt  and  effective  considera- 
tion is  emphasized.  Unless  government  employees  are  fairly  treated, 
we  cannot  expect  from  them  the  conscientious  attitude  toward  their 
work  which  produces  the  highest  efficiency.  The  govenimcnt  must  be 
a  just  employer. 

The  Conference  believes  that  the  present  method  of  fixing  the  com- 
pensation of  many  public  employees  is  inadequate,  and  that  it  does  not 
provide  for  that  periodical  revision  which  is  essential  when  the  cost 
of  living,  and  the  consequent  jnuchasing  power  of  wages,  are  shifting 
rapidly.  Therefore  it  has  attached  to  its  proposed  plan  of  adjustment, 
a  section  in  which  provision  is  made  for  meeting  this  need.  Findings 
of  any  adjustment  macliiiuTy  in  tlic  case  of  pul)lic  employees  must 
necessarily  have  tlic  force  merely  of  recommendations  to  the  govern- 


INDUSTRIAL     CONFERENCE    CALLED     BY     THE     PRESIDENT.  43 

ment  agency  having  power  to  fix  wages,  hours  and  working  conditions 
of  the  employees  concerned.  As  a  matter  of  principle,  government 
is  not  in  a  position  to  permit  its  relations  with  its  employees  to  be 
fixed  by  arbitration.  The  plan,  as  modified,  therefore  avoids  arbitra- 
tion. There  is,  in  the  case  of  public  employees,  no  appeal  to  the  Na- 
tional Industrial  Board  and  no  reference  to  an  umpire.  The  Board  of 
Inquiry  is  also  omitted  from  the  modified  plan,  {Cf.,  supra,  pages 
27  and  28) . 

It  is  desirable  that  the  utmost  liberty  of  action  should  be  accorded 
government  employees,  wholly  consistent,  however,  with  the  obliga- 
tions they  are  under  to  the  state.  No  objection  should  be  interposed 
to  their  association  for  mutual  protection,  the  advancement  of  their 
common  interests  and  the  presentation  of  grievances.  On  the  other 
hand,  the  government  has  a  right  to  expect  and  to  receive  from  them 
undivided  loyalty. 

Government  employees  individually  are  free  to  leave  the  service, 
but  no  group  should  be  permitted  to  strike  or  to  threaten  concerted 
cessation  of  work.  This  opinion  is  expressed  in  the  constitutions  of 
a  number  of  employees'  organizations,  and  the  principle  should  be 
generally  accepted. 

The  further  question  arises  as  to  the  propriety  of  such  organiza- 
tions, or  their  members,  affiliating  with  other  organizations  who  hold 
to  the  right  to  strike. 

Policemen  and  others,  whose  duties  relate  to  the  administration  of 
justice  and  the  preservation  of  life  and  property,  should  not  join,  or 
retain  active  membership  in,  or  be  affiliated  with  organizations  that 
resort  to  the  strike.  This  conclusion  is  based  upon  the  principle  that 
they  should  be  above  any  suspicion  in  the  public  mind  of  partiality 
in  the  discharge  of  their  official  duties. 

For  many  years  union  labor  refused  to  grant  charters  to  policemen's 
unions,  and  this  policy  has  the  stamp  of  public  approval  to-day. 

The  case  of  members  of  fire  departments  is  analogous.  Their 
functions  are  closely  associated  with  those  of  the  police.  They  are 
likewise  charged  with  the  protection  of  life  and  property  and  are  sub- 
ject to  call  in  case  of  riot.  Although  for  some  years  charters  have 
been  granted  to  firemen's  unions  by  organized  labor,  a  number  of 
these  have  lately  been  surrendered,  in  deference  to  the  weight  of 
public  opinion. 

In  denying  to  policemen  and  others,  whose  duties  relate  to  the 
administration  of  justice,  and  the  preservation  of  life  and  property, 
the  privilege  of  striking,  and  of  affiliating  with  outside  labor  organ- 
izations, society  must  recognize  that  a  double  emphasis  is  placed  upon 
the  obligation  fairly  to  compensate  these  special  public  servants,  and 


44  INDUSTRIAL  CONFERENCE   CALLED  BY  THE  PRESIDENT. 

to  insure  the  prompt  consideration  of  the  grievances  which  they  may 
individually,  or  by  right  of  association  among  themselves,  collectively 
present. 

The  Conference  has  been  unable  to  agree  upon  any  recommendation 
as  to  the  propriety  of  the  affiliation  of  other  classes  of  public  employees, 
with  organizations  which  resort  to  or  support  the  strike. 


12.     AGRICULTURE. 

In  urging  greater  production  as  vital  to  the  general  prosperity,  it 
should  be  kept  in  mind  that  the  large  issue  of  agricultural  production 
is  profoundly  influenced  by  the  competitive  conditions  between  the 
factory  and  the  farm,  as  to  wages,  hours  and  conditions  of  work.  Any 
condition  which  puts  hired  help  beyond  the  ability  of  the  farmer  to 
afford,  thus  limiting  food  production  to  that  possible  with  the  farmer's 
own  labor  and  that  of  his  family,  will  emphasize  the  tendency  to 
reduce  agricultural  production,  to  lower  the  efficiency  of  the  farm,  to 
modify  unfavorably  the  American  standards  of  farm  life,  and  to  in- 
crease the  cost  of  living.  Any  condition  that  reduces  the  buying  power 
of  farmers  as  a  whole  will  tend  to  destroy  a  well  balanced  economic 
relation  between  industrial  and  agricultural  producers,  under  which 
each  should  be  the  largest  and  best  customers  for  the  products  of  the 
other. 

The  insistent  demand  for  reduction  of  the  cost  of  living  has 
directed  attention  to  the  fact  that  the  cost  of  material  is  but  a  small 
part  of  the  cost  to  the  ultimate  consumer.  On  the  farm  the  increased 
cost  of  the  materials  consumed,  of  labor,  of  fertilizers,  of  machinery 
and  of  the  other  factors  of  production  has  greatly  increased  the  cost 
of  production.  There  can  be  no  substantial  reduction  in  the  price  of 
farm  products  until  the  factors  entering  into  the  farmer's  cost  have 
been  taken  into  account.  The  gross  receipts  of  the  farm  are  a  false 
standard  by  which  to  measure  the  farmer's  pay  for  his  own  labor  or 
the  returns  on  his  investment.  Any  adjustment  of  economic  rela- 
tions which  overlooks  these  fundamental  conditions  will,  in  the  effort 
to  allay  unrest  in  one  circle,  tend  to  increase  it  in  another. 

There  is  a  broad  national  problem  in  the  disparity  of  human  effort 
applied  to  agriculture  and  that  applied  to  general  industry.  If  the 
conditions  of  labor  and  effort  in  general  industry  are  to  be  relaxed 
below  the  standards  in  agriculture,  it  can  only  result  in  an  increased 
burden  on  agriculture,  with  a  sequel  of  diminshcd  agricultural  pro- 
duction. If,  under  such  disparity  of  effort,  general  industry  can  still 
find  an  outlet  for  its  commodities  in  export  trade,  it  means  ultimately 


INDUSTRIAL  CONFERENCE   CALLED  BY  THE  PRESIDENT.  43 

the  dependence  of  the  United  States  on  imported  food.  It  means  the 
upbuilding  of  large  industrial  centers,  with  all  their  train  of  human 
problems. 

From  the  standpoint  of  the  physical  and  moral  development  of 
the  people  as  a  whole,  the  Conference  believes  it  would  be  a  disaster  to 
exaggerate  industrial  development  at  the  cost  of  agriculture.  The 
industrial  population  can  look  forward  neither  to  ultimate  safety  nor 
to  an  increasing  standard  of  living  from  such  a  shift  of  national 
activities. 

The  present  system  of  distributing  food  stuffs  in  the  United  States 
imposes  an  unnecessarily  large  cost  upon  consumers  and  reacts  to 
depress  the  returns  from  agriculture.  A  considerable  portion  of  this 
cost  of  distribution  arises  necessarily  from  the  wide  separation  of  food 
producing  areas  from  the  centers  of  population.  Other  necessary 
items  of  cost  arise  out  of  the  fact  that  products  cannot  always  be 
marketed  at  the  season  when  they  are  produced,  and  therefore  have  to 
be  stored.  There  are,  however,  in  the  inevitable  chain  of  distribution 
and-  inherent  speculation  many  unnecessary  links. 

The  present  distribution  of  food  is  inherently  and  necessarily  upon 
a  speculative  basis,  because  each  agency  that  handles  the  product  is 
speculating  upon  its  ability  to  find  supplies  on  the  one  hand  and  cus- 
tomers on  the  other.  The  Conference  believes  that  cooperation  among 
consumers  in  the  purchase  of  their  supplies,  and  among  producers  in 
the  marketing  of  their  products,  will  tend  to  stabilize  both  demand  and 
supply,  and  offer  legitimate  opportunity  for  reduction  in  the  margin 
between  producer  and  consumer. 


13.     UNEMPLOYMENT  AND  PART  TIME  EMPLOYMENT. 

One  fundamental  problem  which  underlies  any  consideration  of 
the  effective  use  of  the  productive  capacities  of  our  country,  is  the 
problem  of  unemployment.  So  long  as  a  great  body  of  men  and  women 
capable  of  doing  productive  work  are  unemployed,  the  total  industrial 
output  of  the  nation  will  be,  by  that  much,  less  than  the  attainable 
maximum. 

The  human  side  of  the  problem  is  even  more  important  than  its 
economic  aspects.  Economic  aspects  are  important  only  because  of 
their  relation  to  human  welfare.  The  fear  of  unemployment  is  the 
permanent  pervading  background  for  a  large  number  of  our  population. 
The  fact  of  unemployment  is  a  breeder  of  discontent,  resentment  and 
bitterness. 

There  is  no  single  solution.     Urgent  need  exists  for  an  immediate 


46  INDUSTRIAL  CONFERENCE   CALLED  BY   THE  PRESIDENT. 

and  thorough  study  of  the  problem  by  individual  industries  so  that 
analysis  of  the  conditions  in  each  may  suggest  appropriate  measures 
of  amelioration.  Otherwise  the  country  will  be  confronted  with  the 
demand  for  legislation  still  on  trial  in  those  countries  which  have 
adopted  it,  and  will  be  without  the  information  necessary  to  a  wise 
choice  of  remedies.  The  situation  presents  a  challenge  to  American 
ingenuity  and  initiative,  to  develop  methods  suitable  to  our  industrial 
fabric  and  consonant  with  American  institutions. 

Part  time  employment  is  closely  related  to  unemployment.  Its 
principal  causes  are,  first,  seasonal  demand  for  the  products ;  second, 
insufficient  car  supply  at  the  time  when  delivery  is  required;  third, 
individual  or  collective  dissatisfaction  with  the  wages  and  conditions  of 
employment ;  fourth,  breakage  in  the  equipment  of  the  plant.  The 
aggregate  economic  loss  from  these  causes  is  enormous,  and  the  in- 
dividual hardships  produced  are  frequently  important  factors  in  in- 
dustrial unrest. 

Earnest  and  partially  successful  efforts  are  being  put  forth  in  the 
needle  trades  to  overcome  the  injurious  effects  of  seasonal  occupation, 
by  using  the  product  as  a  basis  of  credit  to  finance  continuous  opera- 
tions, instead  of  rushing  the  work  in  four  separate  seasons  within  the 
year.  Methods  are  now  being  devised  by  the  Coal  Commission  to  solve 
the  first  and  second  questions,  in  connection  with  coal  mining  opera- 
tions, by  having  the  railroads,  public  utilities,  steel  plants,  and  other 
large  consumers  purchase  and  store  the  largest  portion  of  their  coal 
supply  during  the  dull  season  in  the  trade,  thereby  relieving  the  con- 
gestion during  the  busy  season,  and  making  the  car  supply  more  uni- 
versally available  throughout  the  year.  The  need  for  such  steps  is 
emphasized  by  the  fact  that  in  the  bituminous  coal  industry  there  is 
apparently  a  loss,  through  broken  time,  of  approximately  90  days  per 
employee  per  year.  As  a  result  of  this  condition,  30  per  cent  more  men 
than  would  otherwise  be  needed  are  engaged  in  mining  the  country's 
coal,  and  the  wages  of  the  men  are  consequently  less  than  the  attainable 
maximum. 

The  present  efforts  embody  the  first  systematic  attempt  to  find  a 
remedy.  The  experiments  have  not  been  of  sufficient  magnitude  or 
duration  to  give  a  proper  estimate  of  the  possible  results,  but  the  Con- 
ference is  of  the  opinion  that  efforts  of  this  character  should  be  en- 
couraged in  all  of  the  industries  that  lend  themselves  to  such  arrange- 
ments, and  methods  should  be  provided  by  which  credits  can  be  fur- 
nished for  carrying  the  purpose  into  effect,  properly  safeguarded  to 
protect  the  public  against  hoarding  a  greater  amount  of  material  than 
the  ensuing  period  of  seasonal  demand  can  absorb. 


INDUSTRIAL  CONFERENCE   CALLED  BY  THE  PRESIDENT.  47 

There  are  certain  fields  of  activity  in  which  these  methods  cannot 
be  applied,  such  as  the  building  industry,  but  even  in  these  fields  sub- 
stantial relief  can  be  obtained.  It  is  well  known  that  a  considerable 
number  of  men  engaged  in  building  occupations,  are  by  virtue  of  the 
nature  of  the  work,  compelled  to  move  from  place  to  place  where  build- 
ings are  being  erected,  in  order  to  secure  a  maximum  of  employment. 
They  have,  therefore,  in  many  instances  acquired  migratory  habits. 
Building  operations  are  no  longer  purely  local.  Such  enterprises 
frequently  extend  into  a  number  of  states,  east  and  west,  north 
and  south.  By  a  common  understanding  among  architects,  build- 
ers and  workmen,  outdoor  work  in  the  South  can  be  planned 
for  and  conducted  during  the  late  fall,  winter  and  early  spring, 
so  as  to  provide  for  the  surplus  migratory  labor  from  the  North.  The 
work  in  the  North  can  be  so  arranged  as  to  get  the  largest  possible 
amount  under  cover  before  the  inclemency  of  winter  prevents  outdoor 
operations.  By  this  means  employment  can  be  provided  during  the  dull 
season  for  a  very  considerable  amount  of  resident  labor. 

The  erection  of  public  works  by  government,  local  and  federal,  has 
a  direct  relation  to  the  subject,  and  may  be  made  one  of  the  most  use- 
ful approaches  to  the  general  problem  of  unemployment  and  part  time 
employment.  If  large  public  works  programs  are  undertaken  at  times 
either  of  general  unemployment  or  of  local  seasonal  periods  of  low 
employment  demand,  they  will  provide  substitute  employment  for 
large  numbers  of  men,  and  substantially  reduce  the  individual  hard- 
ships of  the  workers  and  the  economic  loss  to  the  community.  If,  on 
the  otner  hand,  programs  of  road  building  and  other  public  work  are 
initiated  at  times  of  general  industrial  activity,  and  at  seasons  of  high 
agricultural  demand  for  labor,  the  activities  of  the  state  may  seriously 
hamper  private  initiative,  may  place  an  unnecessary  burden  upon 
farmers,  and  will  preclude  the  possibility  of  applying  such  work  to 
alleviate  unemployment. 

The  third  cause,  namely,  individual  or  collective  dissatisfaction 
with  the  wages  and  conditions  of  employment,  leads  into  the  considera- 
tion of  one  of  the  great  phenomena  in  American  industrial  life — the  so- 
called  turnover  of  labor.  There  is  no  other  country  in  the  world  where 
the  turnover  of  labor  is  so  tremendous.  In  normal  times  it  is  nothing 
unusual  to  find  establishments  in  which  the  turnover  is  two  hundred  to 
three  hundred  per  cent,  per  annum ;  that  is,  in  which  it  requires  the 
hiring  of  two  hundred  to  three  hundred  workmen  during  the  year  to 
maintain  an  organization  of  one  hundred.  Such  a  condition  naturally 
reduces  efficiency.  There  is  not  only  the  loss  of  time  incident  to  the 
change  of  men,  but  no  man  can  be  thoroughly  efficient  in  his  job  until  he 


48  INDUSTRIAL  CONFERENCE   CALLED  BY  THE  PRESIDENT. 

has  become  familiar  with  his  machine,  his  shop,  the  characteristics  of  his 
shopmates  and  foreman,  and  the  hundred  and  one  other  details  that 
go  to  make  up  the  sum  total  of  his  shop  surroundings.  Turnover  is 
the  individualistic  strike.  It  represents  the  unorganized  workman  dis- 
satisfied with  conditions,  or  the  organized  workman  unable  or  unwilling 
to  interest  his  fellows  in  a  collective  protest.  It  produces  in  the  aggre- 
gate much  more  loss  of  time  than  is  involved  in  all  of  the  strikes  of 
trade  unions,  or  spontaneous  collective  protest.  The  causes  are  numer- 
ous and  vary  with  different  shops  and  different  communities.  They 
may  exist  within  the  shop  itself  or  in  the  conditions  outside  of  the 
shop.  The  lack  of  proper  housing  and  transportation  facilities  in- 
creases the  movement  of  workmen  from  job  to  job.  Instances  of  this 
sort  are  on  record  in  which  the  turnover  has  been  as  high  as  one  hun- 
dred per  cent,  a  week  for  a  prolonged  period.  No  efficiency  can  be 
obtained  under  such  circumstances. 

The  Conference  recommends  that  some  agency  in  every  establish- 
ment be  specifically  intrusted  with  the  duty  of  inquiring  into  and,  as  far 
as  possible,  correcting  the  conditions  that  produce  such  grave  and  un- 
desirable results. 

The  fourth  cause,  namely,  breakage  in  the  equipment  of  the  plant, 
is  so  directly  a  problem  of  management,  and  has  such  immediate  bear- 
ing upon  the  return  on  the  capital  invested,  that  engineering  skill  is 
being  continuously  applied  to  reduce  it  to  a  minimum.  Except  as 
concerns  safety,  this  cause  therefore,  may  be  properly  intrusted  to 
the  intelligent  self-interest  of  the  management.  Where  that  is  not 
sufficient  to  promote  safety,  it  is  the  duty  of  the  state  to  step  in,  as 
it  has  done  very  generally,  and  use  its  police  powers  in  protecting  the 
health  and  safety  of  workers. 


14.     PUBLIC  EMPLOYMENT  CLEARING  HOUSE. 

The  problem  of  unemployment  is  aggravated  by  the  fact  that  at 
the  present  time  there  is  no  adequate  method  for  mobilizing  such  a 
so-called  labor  reserve  as,  in  spite  of  all  efforts  to  reduce  unemploy- 
ment, may  at  any  given  time  actually  exist.  At  the  present  time  there 
are  many  labor  reserves  but  no  mobilized  reserve.  The  creation  of  a 
Federal  Reserve  System  in  banking  has  mobilized  and  coordinated 
the  nation's  credit  reserves.  Under  such  a  system  the  nation  can 
transact  a  larger  volume  of  business  on  a  given  capital  and  credit  than 
would  be  attainable  under  a  system  of  separate  banks  acting  individ- 
ually in  tiicir  localities.  Similarly  the  country's  productive  capacity 
can  be  increased  by  the  creation  of  a  unified  system  of  labor  exchanges, 


INDUSTRIAL  CONFERENCE  CALLED  BY  THE  PRESIDENT.  49 

making  what  is  in  effect  a  single  labor  reserve  that  can  be  drawn 
on  by  industry  in  any  part  of  the  nation. 

The  Conference  recommends  establishing  a  system  of  employ- 
ment exchanges,  municipal,  state  and  federal,  which  shall  in  effect 
create  a  national  employment  service.  The  employment  problem  is  in 
the  first  instance  a  local  problem.  The  first  objective  must  be  the 
placement  of  local  men  in  local  establishments  in  order  to  keep  as  large 
a  number  of  the  employees  as  possible  at  home  with  their  families.  But 
no  purely  local  approach  to  the  problem  is,  or  can  be  effective.  Labor 
surplus  and  labor  shortage  exist  side  by  side  within  the  country  at  the 
same  time,  although  not  necessarily  within  the  same  state.  Carpenters 
or  machinists  may  be  out  of  work  in  Chicago  at  the  same  time  that 
there  is  a  demand  for  such  artisans  in  Pennsylvania. 

Perhaps  more  important  is  the  constant  problem  of  bringing  labor 
from  the  towns  and  cities  to  the  farms,  both  locally,  and  in  times  of 
great  seasonal  demand  for  farm  operations  when  the  need  of  the  farmer 
requires  the  more  extensive  transfer  of  labor,  from  both  his  own  and 
neighboring  states. 

Experience  during  the  war  has  proved  these  general  principles  to  be 
true  in  a  period  of  high  employment  demand;  they  are  even  more 
generally  applicable  in  normal  times.  Until  a  system  shall  exist  for  the 
gathering  of  information  by  the  municipalities  and  states,  and  its 
exchange  through  a  federal  agency,  jobs  will  be  seeking  workers  and 
workers  seeking  jobs  at  the  same  time  but  at  different  places,  and  a 
consequent  national  loss  in  production  will  result. 

The  matter  is  not,  and  cannot  be  satisfactorily  dealt  with  merely  by 
private  agencies,  local  and  competitive  in  character,  and  operating  at 
best  within  a  narrow  geographic  field.  The  nation  has  so  vital  and  per- 
sisting an  interest  in  maintaining  the  industrial  product,  and  in  reducing 
the  hardships  due  to  unemployment,  that  it  must  interest  itself  in  the 
problem. 

At  the  present  time  seventeen  states  maintain  public  employment 
ofifices.  The  work  of  these  agencies  was  coordinated  during  the 
period  of  the  war  through  the  United  States  Employment  Serv^ice — a 
federal  agency  which  furthermore  opened  offices  in  states  having  no 
state  service,  and  thus  established  a  system  national  in  scope.  This 
system  has  virtually  lapsed  with  the  return  of  the  country  to  a  peace 
footing. 

To  secure  decentralized  administration  in  the  states,  under  the 
supervision  of  its  citizens,  to  avoid  the  establishment  of  a  federal 
bureaucracy,  to  foster  the  development  of  such  service  throughout  the 
nation,  the  Conference  recommends  the  enactment  of  appropriate  legis- 


50  INDUSTRIAL  CONFERENCE  CALLED  BY  THE  PRESIDENT. 

lation  by  the  Congress,  making  provision  for  an  employment  clearing 
house  under  federal  control,  which  shall  allot  to  the  several  states  that 
have  established,  or  shall  establish  state  employment  offices,  their  pro- 
portionate share  of  the  federal  appropriation,  but  not  exceeding  to  any 
state  the  amount  that  shall  be  appropriated  from  state  funds  for  this 
purpose.  This  cooperative  relation  between  federal  and  state  govern- 
ments has  been  followed  in  other  fields  and  may  well  be  extended  to  the 
employment  field. 

Such  a  service,  if  it  is  to  succeed,  must  obviously  have  the  full  co- 
operation of  employers  and  employees.  The  war  emergency  developed 
some  weaknesses  in  administration,  which  in  the  opinion  of  the  Con- 
ference can  wisely  be  corrected  in  the  light  of  such  experience.  To 
justify  the  cooperation  of  both  parties  the  needs  of  both  must  be 
served  impartially.  To  insure  such  service  the  Conference  recom- 
mends that  committees  equally  representative  of  employers  and  em- 
ployees be  selected  to  advise  and  assist  in  administration. 


INDUSTRIAL  CONFERENCE  CALLED  BY  THE  PRESIDENT.  51 


V.    CONXLUSION. 

In  presenting  these  recommendations  the  Conference  desires  to 
emphasize  that  they  are  not  merely  designed  to  tide  over  a  trouble- 
some period  of  economic  readjustment.  Many  of  the  evils  which  we 
have  pointed  out  were  in  existence  before  the  war,  and  will  remain 
in  existence,  if  steps  are  not  taken  to  remedy  them.  The  machinery 
of  cooperation  and  adjustment  which  we  recommend  we  believe  to 
have  permanent  value  as  an  agency  of  industrial  progress.  At  the 
same  time,  it  should  be  borne  in  mind  that  today,  when  the  sense  of 
the  magnitude  and  danger  of  social  unrest  is  still  acutely  upon  us, 
when  we  have  not  yet  reverted  to  settled  habits  of  thought  and 
action,  when  our  economic  life  is  still  in  a  state  of  readjustment,  it 
may  be  possible  to  establish  ideals  and  set  up  machinery  which  the 
inertia  of  a  later  day  may  defeat.  Not  with  any  feeling  of  panic,  not 
with  any  hysterical  haste,  but  sanely  and  sensibly  we  urge  that  these 
reforms  be  put  into  effect.  And  we  do  so  with  the  belief  that  they 
will  not  only  contribute  largely  toward  the  elimination  of  the  causes 
of  industrial  strife,  but  that  they  will  make  for  the  introduction,  in 
American  industry,  of  those  democratic  principles  which  constitute 
the  most  precious  heritage  of  the  American  citizen. 

William  B.  Wilson,  Chairman 
Herbert  Hoover,   Vice  Chairman 

Martin  H.  Glynn  Oscar  S.  Straus 

Thomas  W.  Gregory  Henry  C.  Stuart 

Richard  Hooker  William  O.  Thompson 

Stanley  King  Frank  W.  Taussig 

Samuel  W.  McCall  Henry  J.  Waters 

Henry  M.  Robinson  George  W.  Wickersham 

Julius  Rosenwald  Owen  D.  Young 


George  T.  Slade 


Willard  E.  Hotchkiss, 
Henry  R.  Seager, 

Executive  Secretaries. 


March  6,  1920. 


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